Fresh grads’ wages falling, Bank Negara reveals

The report also cited a study by Khazanah Research Institute which found that 95 per cent of young workers in unskilled jobs and 50 per cent of those in low-skilled manual jobs were over-qualified for these occupations. — Reuters pic
The report also cited a study by Khazanah Research Institute which found that 95 per cent of young workers in unskilled jobs and 50 per cent of those in low-skilled manual jobs were over-qualified for these occupations. — Reuters pic

Follow us on Instagram and subscribe to our Telegram channel for the latest updates.


KUALA LUMPUR, March 28 — An excess supply of graduates amid limited high-skilled jobs has caused their starting salaries to fall in the past decade, Bank Negara Malaysia (BNM) found. 

A fresh graduate with a diploma could earn a real salary of only RM1,376 in 2018, compared to RM1,458 in 2010, while a Master’s degree holder faced a similar decline in the same period from RM2,923 to RM2,707.

“Evidence suggests that the lack of high-skilled job creation could have played an integral role in this,” BNM’s annual report said.

“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 report also cited a study by Khazanah Research Institute which found that 95 per cent of young workers in unskilled jobs and 50 per cent of those in low-skilled manual jobs were over-qualified for these occupations.

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

However, for those without a tertiary education, the implementation of the minimum wage has supported increases in the salaries of lower-skilled workers.

This has allowed the starting salaries for those at the bottom-end of the education attainment spectrum to catch up.

“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 report said.

In order to reduce these labour mismatches, the report suggested the government generate higher demand for quality labour through the creation of high-skilled jobs.

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

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

Related Articles