Salaries are Getting Lower for Fresh Grads, Says Bank Negara

A study by Bank Negara Malaysia (BNM) found that an excess supply of graduates and the lack of high-skilled jobs has caused their starting wages to decrease in the last 10 years. A fresh graduate with a diploma could only earn a real salary of only RM1,376 in 2018 (it was RM1,458 in 2010), while graduates with Master's degree earn only RM2,707 (compared to RM2,923 in 2010). 

The report said, “Evidence suggests that the lack of high-skilled job creation could have played an integral role in this. Between 2010 and 2017, the number of diploma and degree holders in the labour force increased by an average of 173,457 persons per annum, much higher than the net employment gains in high-skilled jobs of 98,514 persons per annum.

“This suggests that the economy has not created sufficient high-skilled jobs to absorb the number of graduates entering the labour force.”

The paper also mentioned a study by Khazanah Research Institute which found that 95% of young workers in unskilled positions and 50% of those in low-skilled manual jobs were over-qualified for these professions.

“If left unaddressed, this could reduce the incentive for the younger population to pursue higher levels of education and potentially worsen the ‘brain drain’ issue in Malaysia,” the paper said.

Better news for lower-skilled workers

But, for those without tertiary education, the implementation of the minimum wage has improved the wages of lower-skilled workers. This has helped those without high education level to receive higher starting salaries. 

“While starting salaries of graduates have declined in real terms, the real starting salaries of PMR (PT3) and SPM educated employees have risen by 4.6 per cent and 2.3 per cent respectively,” the BNM report stated.

Solving the problem

The study suggested the government create a higher demand for quality labour by generating more high-skilled jobs to reduce these labour mismatches.

“In this regard, it is important to attract new quality investments from both foreign and domestic firms, turning away from the low-cost business model,” the study said.

“Among existing firms, this can be made through automation and moving up the value chain, with a higher dependence on knowledge and technology and coherent investment policies.”

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Source: Malay Mail

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