Report Says Fresh Graduates' Wages Dropped Significantly in 2020

Department of Statistics chief statistician Mohd Uzir Mahidin said that new graduates who entered the job market in 2020 received lower salary than in 2019, with most getting the absolute lowest salary permitted by law.

He said that the COVID-19 pandemic also caused a decrease in labour force participation (LFPR) among fresh graduates. 

According to him, new degree graduates recorded a drop in monthly income where most of them earned between RM1,001-RM1,500 in 2020 than RM,2001-RM2,500 in 2019. 

He added that the monthly income of PhD and Master graduates in 2020 stayed in the range of RM5,000-RM10,000, while diploma graduates were the majority in the RM1,001-Rm1,500 range. 

More fresh graduates had to settle for lower-paying jobs to survive during the pandemic.

Uzir cited the International Labour Organisation's (ILO) Wage Report 2020-2021 and explained that in an economic downturn, the average wages data could be distorted because of the "composition effect" or significant changes in employment. 

He stated that when most of those who lost their jobs were low-wage workers, it increases the remaining employees' average wages. Preliminary study also showed about two-thirds of countries saw slower average wage growth in the first six months of 2020. 

Ministry of Higher Education reported that Malaysia had 318,593 graduates in 2020 compared to 346,686 in 2019. 

Graduates' employability

Uzir said that Malaysian graduates comprised 95.8% (305,301) in 2020, a 7.6% decrease compared to 2019 (330,557). The graduates' employability was at 84.4%. Graduates' employability covers:

• employment,
• continued study, 
• skills improvement, and
• waiting for a job placement

Yet, overall LFPR of 83.9% in 2020 was marginally higher than 2019's 83.5%. For the young age group of 24 years and below, the LFPR was at 64.8% in 2020 compared to 70.2% in 2019.

In 2020, the government increased Malaysia's minimum wage to RM1,200 while the minimum hourly wage is set at RM5.77.

Fresh graduates forced to take up lower-paying jobs?

Benedict Weerasena, an economist at Bait Al Amanah, said that graduates' employability in 2020 was at 84.4%, lower than 2019's 86.2%. However, he noted that graduate employability was still high compared to previous years.

"...The graduate employability rate in 2020 is higher than in 2016 (77.3%), 2017 (79.1%) and 2018 (80.2%)." He stated that this figure is not reflective of underemployment because of the economic downturn stemming from the pandemic or the various movement restrictions implemented in 2020. 

"For instance, how many of these graduates are working temporary jobs or on reduced hours? How many graduates have no choice but to work in low paying or low skilled jobs which do not align with their qualifications?" he asked.

Weerasena said that more degree graduates in 2020 drop into the lower salary scales than in 2019. He added examples:

• 53.6% of degree graduates earned below RM2,000 in 2020, compared to 2019's 50.7%.
• 35.2% of degree graduates earned below RM1,500 in 2020, compared to 2019's 32.6%. 

He suggested that it could be due to fresh graduates:

• being underemployed,
• working lower-paying jobs,
• out of their field of study,
• working fewer hours or part-time jobs. 

He stated that the lower salary scales magnify a developing issue where more fresh graduates will struggle to make ends meet. 

Source: Malay Mail

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