Rethinking graduate wages

New Straits Times

23-05-2025

WHILE concerns over low starting salaries for graduates are valid and deserve attention, it is important to frame the conversation around comprehensive data rather than isolated anecdotal accounts.
The recent narrative, as featured in a news article, paints a dismal picture of graduate earnings. However, key national statistics suggest a more nuanced and, in some cases, more optimistic reality.
A BROADER LOOK AT GRADUATE EARNINGS
Contrary to claims that most degree holders earn below RM3,000, the Department of Statistics Malaysia (DOSM) reports a median salary of RM4,409 and a mean salary of RM4,933 for graduates in 2023.
These figures reflect a more accurate average of what degree holders are earning across industries, rather than the narrower lens of entry-level salaries in specific sectors.
Furthermore, MYFutureJobs, Malaysia's national job-matching platform, shows that graduate-level jobs advertised an average salary of RM4,537 up to last month.
In alignment with DOSM's data, the Social Security Organisation's (Perkeso) 2024 Data Placement also reports that the average salary for graduates entering PMET (Professionals, Managers, Executives, and Technicians) roles is RM3,598.
These numbers show strong alignment between advertised and actual salaries, suggesting that the labour market may be more competitive and fairer than what individual employer surveys suggest.
ENTRY-LEVEL WAGES
It is true that public sector entry-level salaries, such as RM2,250 for Grade 9 (formerly Grade 41), are lower than private sector medians.
However, this figure does not capture the full compensation trajectory, as Grade 9 positions in the government can rise to RM11,110 and come with long-term benefits such as pension schemes, job security and annual increments, which are often absent in many private sector roles.
At the same time, graduates from the arts and social sciences tend to earn lower starting salaries, largely due to market oversupply, limited demand and less direct commercial applicability of their qualifications.
According to the Higher Education Ministry's 2023 data, over 150,000 graduates, or more than 50 per cent of total graduate output, came from non-science, technology, engineering, and mathematics (STEM) fields such as Business Administration and Law (82,288), Arts and Humanities (22,558), Education (17,933) and Social Sciences (17,539).
This oversupply has created a mismatch between graduate output and labour market needs.
Bridging this gap requires targeted upskilling in areas such as digital literacy and analytical competencies — skills critical to enhancing employability and creating pathways to higher-value career opportunities in both the public and private sectors.
MISMATCH, NOT OVERSUPPLY
One of the key issues is not necessarily an oversupply of graduates, but underemployment.
According to DOSM, 35.7 per cent of employed graduates in the first quarter of this year were in roles that did not match their qualifications — a clear sign of skill mismatch rather than graduate surplus.
Yet, the Graduate Employability Rate for last year stood at 92.5 per cent, reflecting that the vast majority of graduates are employed. The challenge lies in aligning job quality with graduate qualifications and aspirations.
This issue calls for improved industry-academia collaboration, not just wage reform.
WHAT NEEDS TO CHANGE
Rather than focusing solely on starting salaries, naturally lower as part of early career progression, the national conversation should pivot toward sustainable and impactful solutions.
Chief among them is closing the skill gap, which requires critically enhancing university curricula to ensure graduates are equipped with skills that align with evolving industry needs.
Greater emphasis on practical, industry-relevant education can bridge the disconnect between academic training and workplace expectations.
Equally important is supporting upskilling and reskilling initiatives, which empower graduates to transition into high-demand sectors such as digital technology, the green economy and advanced manufacturing.
These sectors offer not only better remuneration, but also long-term career resilience.
Data analysis has begun to explore ways to compare outcomes between reskilled/upskilled graduates and fresh graduates.
Although direct official salary comparisons are limited, existing policy frameworks and research consistently show that reskilling improves employability, job readiness and career progression, often leading to better salary outcomes than those available to fresh graduates.
Additionally, stronger industry collaboration must be encouraged. Structured partnerships between the public and private sectors can create clear, purposeful pathways from education to employment, such as internships, apprenticeships and industry-driven training programmes that ease workforce entry and raise job quality.
While there are legitimate concerns about business sustainability, especially among micro, small and medium enterprises, blanket suppression of graduate wages should not be seen as a viable solution.
Instead, a more balanced and forward-thinking approach is required: one that integrates performance-based remuneration, targeted government incentives and comprehensive labour market reforms.
Such a strategy would not only support business viability, but also ensure fair and equitable compensation for Malaysia's highly educated workforce.