Do fresh grads expect unrealistic salaries? This survey says no

The SWTS report noted that the Graduate Tracer Study showed most local working fresh graduates with first degrees earn below RM3,000 and those with diplomas less than RM2,000. — Picture by Azneal Ishak
The SWTS report noted that the Graduate Tracer Study showed most local working fresh graduates with first degrees earn below RM3,000 and those with diplomas less than RM2,000. — Picture by Azneal Ishak

KUALA LUMPUR, Dec 12 — Claims by employers that fresh graduates often ask for ridiculous starting salaries have turned out to be unfounded, Khazanah Research Institute’s (KRI) latest survey on the employment market for youths shows.

The school-to-work transition survey (SWTS), which was released today, gathered crucial insights about salary expectations that found fresh graduates have a very low reservation wage — that is the lowest pay rate which they would be willing to accept for a particular type of job — starting from as little as RM1,550 a month.

The highest expectation is more pronounced among first-time job seekers, the report added, but decreased as they got more experience of the labour market.

But the low wage reservation, born out of disillusionment, has driven today’s fresh graduates to move between jobs quicker than in previous generations, which employers have conveniently exploited to brand millennials as “too demanding.”

“What is interesting is the low reservation wage of those who are currently employed,” the study, conducted in late 2017 to early this year, said.

“The main reasons for this group to seek another job are to have better prospects or higher pay, yet the minimum salary they would accept for a job is on average RM1,550 per month and the modal salary is only RM1,000 a month.”

A survey by hiring agency Jobstreet in 2017 indicated that more than two-thirds of employers complained that fresh graduates are “asking too much” with starting salaries, typically between RM2,400 and RM3,000.

Only 2 per cent of managers said they are willing to pay fresh graduates the expected salary, the same survey found.

Yet data compiled by KRI showed the median salary expectation by Bachelor degree holders to be much lower than what is popularly believed, at RM1,900 while those with higher qualifications were asking as little as a hundred ringgit more.

The median salary expectation from postgraduates, on the other hand, averaged at RM2,200.

Fair demand

The SWTS found that the average salaries that young workers would be prepared to accept for a particular type of job is a monthly average of RM1,555 while the modal income, indicated by the most number of respondents, is just RM1,000.

And they are not lofty expectations, KRI argued in its summary of the findings, considering the average reservation wage is not far off the present national minimum wage, at RM1,100, and that over half of young workers today have tertiary qualifications.

The minimum wage is targeted at the poor and those without qualifications, it added, and not meant to be used as the baseline to structure starting salaries for job seekers with qualifications.

KRI also defended fresh graduates as having every right to ask for what the institute described as a living wage that would allow them to sustain a decent standard of living.

“It does not seem unrealistic for young people to want a living, fair or decent wage that will allow them to sustain a socially acceptable minimum standard of living, beyond the basic necessities like food, clothing and shelter,” the report said.

“A minimum wage is not necessarily a living wage.”

Bank Negara Malaysia stated in a cost of living report released earlier this year that RM2,700 is the minimum needed to “survive” in the country’s major cities. The Malaysian Trade Union Congress, on the other hand, argued that a starting salary of RM3,000 is reasonable by today’s standards.

The SWTS report noted that the Graduate Tracer Study showed most local working fresh graduates with first degrees earn below RM3,000 and those with diplomas less than RM2,000.

The same survey also found that more than half of unemployed degree holders expect salaries of less than RM2,500 and close to two-thirds of unemployed diploma holders expect to earn less than RM2,000.

At the same time, the 2017 Cost of Talent report issued by Universum Global, an employer “branding” firm, showed “Malaysian graduates have one of the lowest expectations in the world for starting salaries.”

Structural weakness

The findings underscore the deeper structural problem beleaguering the job market today, KRI said, where supply of graduates far exceeds demand, industries continue to prefer cheap labour and mismatch in skills and requirements is widespread thanks to a backward education policy that puts too much focus on paper qualifications.

As a result, the study found a staggering 85 per cent of workers with tertiary qualifications taking up low-skilled or manual jobs.

The SWTS was intended to collect education and labour market information on youth, defined as ages between 15 to 29.

The survey was based on five structured, mainly pre-coded questionnaires targeting youth in upper secondary schools, in tertiary education, young job seekers, young workers and employers.

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