23-05-2025
Rethinking graduate wages in M'sia: Are we seeing the full picture?
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 an article titled 'Degree holders lament incommensurate wages', 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 advertise an average salary of RM4,537 as of April 2025.
For better alignment with DOSM's data, another perspective from PERKESO's Data Placement 2024 reports that the average salary for graduates entering PMET (Professionals, Managers, Executives, and Technicians) occupations is RM3,598.
These numbers show strong alignment between advertised and actual salaries, indicating that the labour market may be more competitive and fairer than suggested by individual employer surveys.
Contextualising entry-level wages
It is true that starting salaries in the public sector at RM2,250 for Grade 9 (formerly Grade 41) are lower than average salaries in the private sector. However, this doesn't capture the full compensation trajectory.
Grade 9 positions in government service can reach up to RM11,110, and they often come with long-term benefits like pension schemes, job security, and annual increments that may not exist in many private roles.
At the same time, graduates from arts and social sciences tend to earn lower starting salaries, largely due to a combination of market oversupply, limited demand, and the less direct commercial applicability of their qualifications.
According to the Ministry of Higher Education's 2023 data, over 150,000 graduates, or more than 50 percent of total graduate output, were from non-STEM fields like Business Administration and Law (82,288 graduates), Arts and Humanities (22,558), Education (17,933), and Social Sciences (17,539).
This oversupply creates a notable mismatch between graduate output and labour market needs. Bridging this gap requires targeted upskilling in areas such as digital literacy and analytical competencies, which are critical to enhancing employability and opening pathways to higher-value career opportunities, both in the public and private sectors.
A case of mismatch, not oversupply
One of the key issues at hand is not necessarily that there are too many graduates, but that many are underemployed. According to DOSM, 35.7 percent of employed graduates in Quarter 1, 2025, were in roles that did not match their qualifications, which is a symptom of skill mismatch, not an oversupply of graduates per see.
The Graduate Employability Rate (GER) for 2024, on the other hand, stands at 92.5 percent, which reflects that the vast majority of graduates are indeed employed.
Therefore, the challenge is aligning the quality of those jobs with the qualifications and aspirations of graduates, which is an issue that calls for better industry-academia alignment, not just wage reform.
What needs to change
Rather than placing undue emphasis solely on starting salaries, which are understandably lower as part of the natural career progression, the national conversation should pivot towards more sustainable and impactful solutions.
One of the key areas requiring attention is the closing of the skill gap. This involves a critical enhancement of university curricula to ensure that graduates are equipped with competencies that align with the evolving needs of industry. A stronger emphasis on practical, industry-relevant education can bridge the disconnect between academic training and workplace expectations.
Equally important is the support for upskilling and reskilling initiatives, which empower graduates to transition into high-demand and emerging sectors such as digital technology, green economy, and advanced manufacturing. These sectors not only offer better remuneration but also greater long-term career resilience in a rapidly shifting job market.
Through data mining and analysis, efforts have been made to explore parameters that allow comparison between reskilled or upskilled graduates and fresh graduates.
While direct official salary comparisons for reskilled individuals are limited, existing policy frameworks and research consistently highlight that reskilling enhances employability, job readiness, and career advancement.
These improvements are generally associated with more favourable salary outcomes compared to those of fresh graduates entering the workforce without additional training or experience.
In addition, greater industry collaboration must be encouraged. Structured partnerships between the public and private sectors can create clear, purposeful pathways from education to employment, including internships, apprenticeships, and industry-driven training programmes, which can ease the transition into the workforce and raise job quality.
While there are legitimate concerns about business sustainability, especially among micro, small, and medium enterprises (MSMEs), blanket suppression of graduate wages should not be seen as a viable solution.
Instead, a more balanced and forward-thinking approach is needed, 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.
This Social Security series is in collaboration with PERKESO.
