Summary
The size of skill underutilization in Malaysia is expanding and seen to be persistent over time, depicting a structural nature similar to unemployment. The true potential of the workers cannot be maximized when there is a considerable gap between the skills possessed and the skills required in the workplace.
Return to education is relatively lower in the presence of skill underutilization. In the case of tertiary education, workers with skill underutilization receive wages approximately 50% lower than those with skill utilization.
The size of skill underutilization between Malaysia and the European countries is comparable but it is not becoming extensive public debate in Europe compared to Malaysia. A review of the European labor market suggests that Malaysia may require a two-stage intervention approach to ensure that skill underutilization does not lead to socio-economic implications.
