Top News

The finding, from a report titled The “Gaji Cukup Makan” Economy released in May by labor market research group Future Studies Berhad, includes those with bachelor’s, master’s and even PhD degrees.

For 23-year-old University of Reading Malaysia graduate Howard Ng, his monthly pay of around RM3,000 as a global occupier services executive leaves little wiggle room.

“A third of my salary goes to paying rent, the rest pays for daily necessities, especially food … thankfully I am not currently paying off student loans,” he told CNA.

Yet even that level of pay is seen as excessive for fresh graduates like 23-year-old computer science graduate Andy Yap.

Over the four grueling months he spent applying for jobs after completing his studies at Asia Pacific University of Technology last September, Yap said he was repeatedly told by hiring managers that his expected salary of RM3,000 was “too much.”

He eventually secured a software engineering job with a monthly pay of RM4,000, but said some of his friends with engineering degrees were offered starting salaries just slightly above RM1,000.

Fresh graduates’ struggle with low entry-level wages is a long-standing issue and has become more troubling as real wages have stagnated for decades.

The starting salaries for fresh graduates today, typically between RM2,000-3,000, have only increased modestly in several decades, according to Tan Sri Muhammad Ibrahim, former governor of Bank Negara Malaysia—the country’s central bank.

“This equates to the purchasing power of RM300 – RM400 in the 1980s. In reality, wages have eroded by at least threefold,” he said, adding that he used to earn RM1,300 monthly as a fresh graduate in 1984.

When adjusted for a 5% annual inflation rate, today’s graduate salaries should be in the ballpark of RM7,000-8,000, he said early last month, as quoted by New Straits Times.

Similarly, a report by the PNB Research Institute found that, after adjusting for inflation, the median entry-level salary for tertiary qualification holders in Malaysia has declined significantly over the past 25 years—by 28% for those with a master’s degree and 10% for bachelor’s degree holders.

This means the median fresh graduate with a master’s degree who joined the private sector for the first time in 2022 earned nearly one-third less than someone in the same position did in 1997, the report said.

This stagnation has left many graduates grappling with the cost of living and forced them to make difficult compromises, according to Diana Khairuddin, a human resource consultant at HR Edge.

“It’s a system that’s clearly out of sync with today’s economic realities and in urgent need of reform,” she said.

Data from the Employees Provident Fund shows a single adult without a vehicle needs around RM1,530 per month to get by in Alor Setar city and up to RM1,930 in the Klang Valley, the country’s economic and urban hub.

26-year-old finance executive Nur Nafisah Hamdan shared that her lifestyle has been influenced by her salary.

She has adapted by cooking at home during the week and cutting back on dining out or ordering takeaways. For housing, she chose an older, more affordable place, even though it is not in her preferred area, she said.

“The reality is harsh for many fresh graduates as their pay does not align with the cost of living in urban areas,” she told The Sun. “Most job offers are based on the government’s minimum salary, which is RM1,700.”

Underemployment and skill mismatch

According to the PNBRI report, degree holders in 1997 earned 2.7 times more than those with SPM qualifications, which represent the completion of 11 years of schooling up to the secondary level. By 2022, this gap had narrowed to 1.7 times.

“The higher the qualification of an entry-level employee, the lower the salary has grown over the period,” it concluded.

This points to a growing gap between the number of degree holders and the demand for their skills, which results in stagnant or even falling real wages for graduates, according to The Star.

Human Resources Minister Steven Sim noted that while Malaysia produces roughly 300,000 graduates annually, only about 50,000 skilled and well-paying positions are available.

As a result, many are forced to accept lower-skilled roles where their qualifications are underutilized, further suppressing wage growth.

The PNBRI report found that in 2021, as much as 55% of diploma holders and 44% of degree holders were overqualified for the jobs they landed.

Some experts believe the wage issue also stems from a skill mismatch as academic degrees may not prepare graduates for the growing demands of the digital and industrial economy.

Arulkumar Singaraveloo, CEO of the Malaysia HR Forum, pointed out that employers have raised concerns about the quality of Malaysian graduates.

Sharifah Hani Yasmin, a career consultant and founder of resume and CV reviewer SY Professional Review, noted that many graduates lack the industry exposure, such as internships and hands-on work experience, needed to meet employer expectations or justify higher pay.

“Unless there is a coordinated shift where academic institutions redesign programmes around real industry and companies take ownership of talent development, I believe this pattern (of underemployment) will continue to repeat,” Sharifah said.

Yun Liu, HSBC’s ASEAN economist, said a skill mismatch limits how fast degree holders’ wages can grow.

Bridging this gap would require both the country to advance up the value chain collectively and its youth to align their education and skills with market demands, she noted.

‘Brain drain’ concerns

The lack of well-paying, skilled jobs at home has pushed many Malaysians to look abroad for better opportunities, adding to concerns of a “brain drain” in the country.

As of 2022, around 1.86 million Malaysians had migrated overseas, with 1.13 million settling in neighboring Singapore, TODAY reported, citing V. Sivakumar, Malaysia’s former human resources minister.

Of those residing in the city-state, roughly 39% were classified as skilled workers and 35% as semi-skilled, based on a government study published last year.

However, many of those who went abroad are not working in high-skilled roles.

Muhammad, the former central bank governor, said a rising number of Malaysians, drawn by higher wages, are crossing the border daily for manual labor roles.

“If Malaysia fails to transform its economic structure, we risk becoming a net exporter of labour rather than talent,” he warned, as cited by New Straits Times.

“One day, our children could end up working as domestic helpers abroad — and I wouldn’t be surprised if it happens.”