Unemployment Trends in Peninsular Malaysia during the 1970s

Abstract

There are a number of reasons why economists regard unemployment as undesirable. Sen (1975) lists three benefits of employ ment ? production, income and recognition (or feelings of self worth). If an individual is unemployed (or under-employed in the sense of working fewer hours than he or she desires), then the aggregate production of goods and services is lower than otherwise. Income is also lower, and is commonly associated with poverty1 which may have consequences such as crime, ill-health, and political instability, the costs of which society must meet.2 An unem ployed individual is likely to have a lower self-esteem than an employed person and this too can result in costs to society. The enhance ment of political and social stability is another important motive for limiting unemployment in Malaysia. There is a wide literature on unemployment in developing countries and we shall confine our attention to a few selected aspects. Greg ory (1980) has shown that, contrary to popular belief, there is no clear evidence to suggest that conditions (including unemployment) worsened during the 1960s. A re-study (Harris and Zakariah 1984) found that during the 1970s unemployment worsened significantly, particularly as regards the abso lute number of open unemployed. This oc curred along with a large increase in the number in employment and an improvement in their employment conditions. There are several reasons for believing that unemployment might increase substantially in developing countries during the 1980s and 1990s, and these particularly derive from the supply side. The rapid population growth of the 1960s and 1970s will lead to a very rapid growth of labour forces (about 2.2 per cent per annum between 1980 and 2000 compared with about 1.7 per cent per annum between 1960 and 1980). Squire (1981, pp. 44-45) cites World Bank projections of an increase in de veloping country labour forces of 450 million between 1980 and 2000 compared with 277 million in the preceding twenty years. Another supply-side factor relates to school enrolments. Between 1960 and 1975, the proportion of children of primary school age enrolled in schools increased from 47 to 62 per cent. Given the strong existing trend for absolute falls in employment in agriculture, these supply-side factors suggest a massive increase in the number of secondary and tertiary sector jobs required if large-scale unemployment is to