Report: Fresh grad salaries fell to minimum wage level in 2020, says Stats Dept

Uzir said the Covid-19 pandemic also caused a lower labour force participation among fresh graduates. — Picture by Firdaus Latif
Uzir said the Covid-19 pandemic also caused a lower labour force participation among fresh graduates. — Picture by Firdaus Latif

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KUALA LUMPUR, Apr 1 — New graduates who joined the job market last year received lower pay than the previous year, with most getting the absolute lowest salary allowed by law, Statistics Department’s chief statistician Mohd Uzir Mahidin said.

He told The Malaysian Insight that the Covid-19 pandemic also caused a lower labour force participation (LFPR) among those fresh graduates.

“(New) degree graduates recorded a decrease in monthly income where the majority of them earned between RM1,001 and RM1,500 in 2020 compared to RM2,001-RM2,500 in 2019.

“At the same time, the monthly income of Malaysian PhD and Master graduates in 2020 remained in the range of RM5,001-RM10,000, while diploma graduates were the majority in the range of RM1,001-RM1,500,” he said.

Citing the Wage Report 2020-2021 by the International Labour Organisation (ILO), Uzir explained that in an economic downturn, the data on average wages could be distorted due to the “composition effect” or major changes in employment.

“When most of those who have lost their jobs are low-paid workers, this increases the average wages of the remaining employees.’’ he said.

Preliminary data also showed about two-thirds of countries saw slower average wage growth in the first half of 2020, said Uzir.

According to the Ministry of Higher Education, Malaysia recorded 318,593 graduates in 2020, lower than the 346,686 in 2019.

“Malaysian graduates comprised 95.8 per cent (305,301) in 2020, a 7.6 per cent drop compared to 2019 (330,557).

“The graduates’ employability, which encompassed employment, continued study, skills improvement and waiting for a job placement, was at 84.4 per cent,’’ explained Uzir.

However, overall LFPR of 83.9 per cent last year was marginally above 2019’s 83.5 per cent said Uzir.

“However, for the young age group of 24 years and below, LFPR was at 64.8 per cent in 2020 compared to 70.2 per cent in 2019,” Uzir said.

Last year, the government raised set the country’s minimum wage tohave RM1,200 while the minimum hourly wage is set at RM5.77.

The Malaysian Insight also quoted Benedict Weerasena, an economist at independent research institute Bait Al Amanah, as saying that graduates’ employability in 2020 was at 84.4 per cent compared to 86.2 per cent in 2019.

However, he noted that graduate employability was still high when compared to the previous years.

“In fact, the graduate employability rate in 2020 is higher than in 2016 (77.3 per cent), 2017 (79.1 per cent) and 2018 (80.2 per cent).”

He said, however, this figure is not reflective of underemployment due to the economic downturn stemming from Covid-19 or the various movement restrictions implemented last year.

“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.

This includes salaries of graduates entering the job market last year, which is lower compared to salaries earned in 2019, said Weerasena

“More degree graduates in 2020 fall into the lower salary scales compared to the year 2019.

“For instance, 53.6 per cent earned below RM2,000 in 2020, compared to 50.7 per cent in 2019. Also, 35.2 per cent earned below RM1,500 in 2020, compared to 32.6 per cent in 2019,’’ he said.

Weerasena suggested that this was possibly due to fresh graduates simply being underemployed, by working lower paying jobs, out of their field of study or working fewer hours or part time jobs.

“The lower salary scales magnify a growing problem where more fresh graduates will struggle to make ends meet,” he said.

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