Table of contentsEconomic recessionForeign direct investmentTechnological innovationThe number of graduates in Malaysia has increased significantly every year and the real challenge they face after graduating is competition to get a job, especially in this economic situation. There are too many graduates from public, private and foreign institutions, but job creation and labor demand are very low, resulting in most graduates not being able to find placement and staying unemployed for a period of 6 months to a year after obtaining their diploma. . Therefore, graduating from university does not guarantee employment and this makes many young people unemployed in Malaysia. According to some statistics, there are around 250,000 graduates each year, but one in five of them will remain unemployed 6 months after graduation and 24% of the unemployed working population have a degree. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay However, youth unemployment is not caused by the number of graduates. Economically, the number of jobs created depends on the economic performance of the country. According to Okun's law, it explains the relationship between employment and economic growth. Dally and Hobijin (2010) stated, “Economists have long known that the overall performance of the economy, as measured by GDP, has a direct impact on unemployment” (p. 1). It is therefore clearly stated that the economic instability of a country can influence the increase in unemployment rates. Unemployment rates are the rates that indicate the percentage of the country's labor force that remains unemployed and still looking for work over the past year. The labor force is the group of people who require employment for income in return and who can also commit to a minimum hour of work. The questions that arise here are how the economic situation impacts unemployment rates in Malaysia. Unemployment rates are very important for developing countries because they indicate the efficiency of the labor resource. According to Omar and Rajoo (2016): Growth of a country can be achieved if unemployment is low. Conversely, in a country with high unemployment, human resources are not fully utilized. For every 1% increase in the unemployment rate, the unemployment rate falls significantly relative to potential GDP by 2%. Unemployment is an interrelated economic development that must be addressed. on the labor market (p. 367). This means that high unemployment indicates that the country is not very efficient in managing its labor resources. The main factors come from the economic well-being of the country. If the country is not doing well economically, it could lead to problems with rising unemployment rates. Thus, it is believed that economic instability can increase unemployment rates due to economic recession, foreign direct investment and income inequality. Economic RecessionVolatile rates of economic growth have important implications for economic stability. When an economy goes through a recession, unemployment, poverty and government borrowing increase. According to Katz (2010), "labor market conditions have deteriorated significantly since the start of the Great Recession in late 2007, making it the most severe labor market downturn since the Great Depression of the 1930s. The rate unemployment more than doubled, from 4.8 percent to fourthquarter 2007 to 10.0 percent in fourth quarter 2009 and remains at 9.7 percent at the start of 2010." This shows that a Great Recession causes a dramatic increase in the unemployment rate compared to the Great Recession of the 1930s. Apart from this, Elsby, Hobjin and Sahin (2010) mentioned that “the unemployment rate today is even higher than the post-war peak of 10.8%”. during the 1982-83 recession, once we adjust for changes in the age structure of the labor force. (p.10) » This therefore means that the unemployment rate at this time is much higher than that of the post-war period, where the unemployment rate is higher than the unemployment peak of 1982-1983. As defined by Kartz (2010), “Rising unemployment during the Great Recession disproportionately affected men, workers in goods-producing industries, younger workers, and non-college workers. But this downturn has been so severe that it has had negative consequences for almost every group of workers and every region of the country, in terms of both significant unemployment and wage stagnation. (p.2) “Recessions can cause companies to exit the business sector, so that they become more reluctant to take investment risks. When a business goes out of business, it leads to increased unemployment because it does not need to hire more employees. When an economy faces a recession, business sales and revenue decline, making it harder for businesses to grow. When demand is not high enough, companies start to make losses and try to cut costs by lowering or keeping wages where they are and stopping hiring new workers, which increases the rate unemployment. During the recession, young adults suffer more than adults. as the unemployment rate among young adults increased. Indeed, young adults lack the experience and skills to convince employers to hire them. As Bell and Blanchflower (2009, 2010, 2011) point out, “Unemployment rates generally increased during the recession. It is therefore reasonable to ask whether young people have suffered disproportionately. We have previously argued that young workers are systematically more likely to be unemployed than adults. (p.15) “Finally, there are two types of policies that can overcome recession and unemployment. The first policy is monetary policy. Under monetary policy, increasing the money supply can reduce the interest rate, which will encourage private investment. When private investment increases, it will open up many employment opportunities in the labor market, which will lead to an increase in aggregate demand, which will increase the equilibrium level of employment where recession and unemployment have reduced. The second policy is tax policy which leads to an increase in public spending. Increasing government spending will increase employment and production. Thus, recession and unemployment will be removed. Foreign Direct Investment Additionally, the decrease in foreign direct investment significantly affects unemployment rates. Malaysia, as a developing country, needs support from foreign countries to improve its economic performance. This can be done by attracting foreign investors to invest in countries where there will be an exchange of new technologies and expertise. However, in case of economic instability, foreign direct investment will be affected and will lead to an increase in the unemployment rate. The decrease inForeign direct investment may be due to the unstable situation of the economy. According to Ifpan, Saad, Nor, Noor and Ibrahim (2016): this is affected by the economic recession and the 911 incident at the American World Trade Center which affects the unemployment rate in Malaysia with a decline in the level of exports to the states -United States and a drop in the IFDI. due to slow growth in the economy as well as an increase in the unemployment rate (p. 2). Therefore, Malaysia is believed to have a high dependence on foreign investment, whether inward FDI or outward FDI, which has caused Malaysia to face a great impact on the unemployment rate, especially during the economic recession. Foreign investments have opened up greater employment opportunities for skilled and unskilled labor in the country, especially in developing countries, thereby reducing the country's unemployment rates (Irpan et al, 2016) . It is believed that FDI plays an important role in reducing unemployment rates in the country by providing better employment opportunities. Larger FDI creates a better country with a high gross domestic product or GDP, thereby creating more job opportunities. A high income country leads to a low unemployment rate. Therefore, all factors are related to unemployment rate, namely GDP, employment opportunities and also economic recession. Studies by Balcerzak and Zurek (2011) mention that although FDI can play its role in reducing unemployment rates, in the long run the government still needs to implement policies to increase investment. Indeed, every country must have a better and stable economy in the long term, fluctuations in the economic situation can have a huge impact on FDI. Government policies are one of the stable tools to help the economy. For example, when the government implements policies that allow more foreign investors to invest in the country, it will create more of a job market for new graduates and reduce the number of unemployed people in the country. labor market. This will ultimately reduce unemployment rates, but new graduates also need to go job hunting and stop being too demanding to get a job. It is important to gain experience first in order to get a better job in the future. However, economic instability also plays an important role in retaining investors in the sectors, as investors' decisions are influenced by the stability of the country. Investors will not invest in a country with poor economic performance and unstable political issues. The government must therefore take measures to secure these investors and the inflow of foreign capital into the country. In short, FDI actually has a significant impact on unemployment rates. Technological innovation Technological innovation can lead to an increase in the unemployment rate. Indeed, not only the technologies that are reshaping labor markets, but also technological advances have changed the nature of work and destroyed certain types of jobs. Forbes magazine, in its January 2018 edition, mentioned that technology had already taken over 90% of the tasks that humans previously performed. For example, in local transportation, before technological innovation, horse-drawn carriages were used as the primary mode of local transportation, which created jobs in building cars, making buggy whips, and breeding horses, but with technological innovation, humans no longer use horse-drawn carriages as they use cars as their main mode of transportation, leading to job destruction.