Master's degree does not guarantee higher pay, says SME group
A mismatch in the labour market has forced many master's degree holders to accept jobs that require lower qualifications and, along with it, lower salaries. (Freepik pic)
PETALING JAYA : The perception that master's degree holders are earning less than expected given their qualifications only holds true in certain cases, says SME Association Malaysia president Chin Chee Seong.
He said the problem stems from a mismatch in the labour market in Malaysia.
'There are limited roles that specifically require postgraduate qualifications, forcing many to accept lower-paying jobs typically held by degree holders,' he told FMT.
Sharing his view is Malaysian Employers Federation (MEF) president Syed Hussain Syed Husman, who pointed out that the relevance of some postgraduate qualifications is limited.
Chin Chee Seong.
Chin said the Malaysian job market has yet to reach a stage where there is a need for more of those with a master's degree.
'Employers are not averse to paying higher salaries. The question is whether or not it is necessary or justified,' he pointed out.
Chin said the association has been urging the government to invest in tech-based industries and to push more small and medium enterprises (SMEs) to adopt advanced technology.
He said that when industries embrace digitalisation, the need for specific technical skills that come only with postgraduate qualifications rises, making employers more willing to offer higher salaries.
He noted that SMEs in some sectors, such as IT services, already offer 'relatively high' starting pay, with fresh graduates earning RM4,000 to RM4,500, depending on the role.
Those with a master's degree in fields like computer science are more likely to earn higher wages, Chin said.
However, postgraduates in areas like human resources or administration may not see the same returns, as these roles only require degree holders.
A recent report by Permodalan Nasional Bhd (PNB) Research Institute said master's degree holders have seen a 10% decline in real wages in the decade leading up to 2022, compared with just a 4% drop in the previous corresponding decade.
In contrast, degree holders saw a slight improvement in wage growth over the same period.
Syed Hussain Syed Husman.
Syed Hussein said factors such as underemployment and an oversupply of graduates have also contributed to wage stagnation.
'Without a corresponding increase in productivity and business performance, employers are unlikely to raise wages simply because an employee holds a higher academic qualification,' he told FMT.
Syed Hussain said postgraduate degrees still offer value in specialised fields such as data science and engineering, but unless qualifications align with evolving industry needs, wage challenges for master's graduates will persist.
He called for closer collaboration between academia and industry to ensure postgraduate programmes are aligned with market needs.
The rate of skills-related underemployment stood at 37% in the second quarter of 2024, deputy economy minister Hanifah Hajar Taib said last year.
He added that youth unemployment also stood at 10.6% for the fourth consecutive month in February, involving 306,600 people, which some attributed to a skills mismatch.
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