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New Straits Times
23-05-2025
- Business
- New Straits Times
Poor data, policy gaps hurt graduate salary growth
PUTRAJAYA: The stagnation in graduate salaries over the past two decades has been attributed to the lack of complete and comprehensive data on the labour market and higher education. Malaysian Inclusive Development and Advancement Institute (Minda-UKM) director Professor Tan Sri Dr Noor Azlan Ghazali said that without a centralised and integrated data system, policymakers face significant challenges in formulating accurate and effective policies, particularly in addressing wage stagnation and graduate underemployment. He said the availability of comprehensive data is crucial for crafting more effective employment and education policies, as well as intervention strategies. He said the real issue that is often overlooked is that many graduates today are employed in jobs that do not match their qualifications or skills. "We often hear claims of demand for tens of thousands of engineers, but actual data shows that only around 30,000 to 40,000 high-skilled jobs are created, while our universities produce over 300,000 graduates each year. "But the question is, where do all these graduates go? As a result, many either seek opportunities abroad or are forced to accept jobs that fall below their qualification levels. "This, in turn, leads them to compete with foreign workers in low-skilled sectors, further contributing to issues such as rising living costs and imbalances in the labour market," he said when met at the One-Year Retreat Session following the 2024 Bumiputera Economic Congress. Previously, a report by the PNB Research Institute (PNBRI), titled Entry-Level Salary Trend in Malaysia: Insights from Private Sector Employment (1997–2022), revealed that the median salary for Malaysian degree holders has declined over the past 25 years, falling from 2.7 times the salary of SPM holders in 1997 to just 1.7 times in 2022. Meanwhile, Noor Azlan added that, based on available data, job creation within the industrial sector remains relatively low compared to the number of graduates produced annually by the country's institutions of higher learning. He also warned that the issue of stagnant graduate salaries could have long-term consequences for the national economy, with one of the most concerning outcomes being growing public scepticism about the value of higher education. He said the perception that attending university no longer guarantees a secure future could discourage individuals from pursuing further studies, even though education should be regarded as a long-term investment in developing high-quality human capital. "There is nothing wrong with someone choosing to work early to gain experience, but if that decision stems from a loss of confidence in the education system, then that is truly worrying. "Knowledge still matters. We must understand that to become a developed nation, society must value education and knowledge," he said.
New Straits Times
20-05-2025
- Business
- New Straits Times
Graduates in the wrong jobs: Experts push for urgent reforms
KUALA LUMPUR: The government must intervene to ensure that entry-level graduates are employed in roles that match their qualifications, say experts. Their concerns follow findings by the PNB Research Institute (PNBRI), which revealed that although higher qualifications have consistently commanded better salaries over the past 25 years, the rate of starting salary growth has been more significant for those with lower levels of education. "In some cases, we are seeing degree holders unable to secure suitable employment and being forced to accept roles intended for SPM-level qualifications. "This should not be happening and indicates a clear mismatch in the labour market," said Dr Ida Md Yasin, economist at Universiti Putra Malaysia Business School. She also described it as "disheartening" that entry-level salaries for graduates had not increased substantially compared to those of SPM holders over the last two decades. "We know that many students pursuing higher education must take out loans to fund their studies. "Imagine spending four to five years at university for a bachelor's degree, only to earn a salary barely higher than that of someone with only secondary school qualifications. "It simply does not seem worthwhile, especially when a portion of that salary must go towards repaying student loans," she said. Echoing her concerns, Dr Mohamad Idham Md Razak, coordinator at the Malaysian Academy of SME and Entrepreneurship Development, Universiti Teknologi Mara, said the declining returns on higher education in Malaysia highlighted deep-rooted structural issues within the economy and labour market. He stressed that this trend should not be interpreted as proof that higher education no longer facilitates social mobility. Rather, he said, it underscored a mismatch between the supply of graduates and the availability of high-skilled jobs. "Contributing factors include the expansion of low-value-added job sectors, dependence on foreign labour, and a persistent skills gap between graduates and industry demands. "Higher education remains vital for social mobility, but it must be better aligned with market needs and reinforced by policies that encourage the creation of quality jobs," he told the New Straits Times. Idham also called for greater collaboration between the government, higher education institutions, and employers to ensure investments in higher education remained relevant and impactful. Commenting on the rising salaries and employability of Technical and Vocational Education and Training (TVET) graduates, he said this clearly demonstrated TVET's strong potential as a practical pathway for school leavers — especially amid increasing demand for technical skills across industries. However, he cautioned that for TVET to become a mainstream option, it must be supported by robust infrastructure, recognised certification, and clear career pathways. "Effective policies such as the National TVET Plan 2030, alongside close cooperation with industry, are essential to enhance TVET's appeal and relevance to students and parents. "Moreover, active industry involvement in curriculum development and the provision of competitive wages are critical in dispelling the notion that TVET is a second-class option," he added.
New Straits Times
20-05-2025
- Business
- New Straits Times
TVET grads catching up on pay, study finds
KUALA LUMPUR: Graduates of Technical and Vocational Education and Training (TVET) are now earning starting salaries that match — or even surpass — those of their academically inclined peers. This was among the key findings of a study conducted by the PNB Research Institute (PNBRI), titled Entry-Level Salary Trends in Malaysia: Insights from Private Sector Employment (1997–2022). According to the report, holders of the Malaysian Skills Certificate (SKM) Level 3 have consistently earned either more or the same as those with a Sijil Tinggi Persekolahan Malaysia (STPM) qualification since 2017. It also found that TVET diploma holders (Diploma Kemahiran Malaysia, DKM Level 4) have experienced stronger wage growth compared to academic diploma graduates. "Between 2012 and 2022, the median starting salary of DKM holders increased by 14 per cent, compared to a mere two per cent for academic diploma holders. This trend reflects the increasing value the labour market places on technical skills, particularly within the private sector," the report revealed. The data drawn from the Malaysian Employers Federation (MEF) Salary Survey also showed that the diploma-level wage gap has narrowed significantly, with some years showing parity between DKM and academic diploma holders. "In 2012, academic diploma holders earned 1.2 times more than their TVET counterparts. By 2022, both groups were earning the same," it stated. Although academic qualifications still command higher starting salaries at the degree level, the report said that TVET pathways were gaining momentum — especially for school leavers entering the workforce earlier. "It is worth noting that individuals may bypass the SPM — an entry requirement for the STPM — and proceed directly to SKM Levels 1 to 3, enabling them to join the workforce at a younger age than STPM holders. "This represents a promising early indicator of TVET's advantages over traditional academic routes." However, the report cautioned that despite high employability, many TVET graduates continued to earn below RM2,000 per month. "As many as 87.8 per cent of TVET graduates still earn under RM2,000 monthly. This raises concerns about skills mismatch and wage stagnation in lower-tier roles. "There may be a disconnect between qualifications and job roles, or a need for improved job placement and upskilling initiatives." To address these concerns, the report recommends expanding access to higher-level TVET qualifications, such as the Advanced Diploma (DLKM Level 5), and introducing structured wage progression policies — including a progressive wage model. "The government should also bolster institutional wage bargaining mechanisms to ensure fairer compensation, particularly at entry level. Supporting TVET graduates beyond initial employment is crucial. Clear pathways for upskilling and wage progression must be established." National TVET Council chairman Datuk Seri Dr Ahmad Zahid Hamidi previously said that TVET graduate employability stood at an impressive 94.5 per cent, with Mara TVET institutions recording an outstanding 98.7 per cent. The PNBRI study also stated the trend suggests employers are placing increasing value on practical skills, and called for continued efforts to align TVET programmes with industry needs.
New Straits Times
20-05-2025
- Business
- New Straits Times
Report reveals slow salary growth for graduates since 1997
KUALA LUMPUR: The median salary for Malaysian degree holders has declined over the past 25 years, falling from 2.7 times the salary of SPM holders in 1997 to just 1.7 times in 2022. According to a report by the PNB Research Institute (PNBRI), titled Entry-Level Salary Trend in Malaysia: Insights from Private Sector Employment (1997–2022), while tertiary education still commands higher pay compared to secondary education, the wage gap has steadily narrowed. "While there remains an 'education premium' for those with higher education qualifications compared to those without, this premium has been declining. "In terms of growth, the median entry-level salary for tertiary qualification holders has declined the most over the 25-year period after adjusting for inflation, by 28 per cent (or -1.3 per cent annually) for master's degree holders and 10 per cent (or -0.4 per cent annually) for bachelor's degree holders. "In other words, the median fresh graduate with a master's degree entering the private sector for the first time in 2022 effectively earned almost one-third less than her counterpart in 1997, in real terms," the report revealed. The report analysed entry-level salaries in Malaysia from 1997 to 2022, using data on employees without prior experience extracted from the Malaysian Employers Federation's Salary Survey. The report added that there was also an increasing number of graduates forced to accept jobs for which they are overqualified, resulting in a wage penalty. This mismatch often forces graduates to accept roles that underutilise their qualifications and undervalue their training. "As a result, they experience a wage penalty, a reduction in earnings compared to what they could have earned in positions aligned with their qualifications. "Overqualification concerns both diploma and bachelor's degree holders alike, but is more acute among diploma holders. "In 2021, as high as 55 per cent of diploma holders and 44 per cent of degree holders were categorised as overqualified for the jobs they secured, often pushed into roles requiring skill levels below their training," it said. While the minimum wage plays an important role in ensuring a basic standard of living, its impact on reducing wage inequality across education levels is limited, it said. "This is especially true if wages for those with higher education are not increasing," it said, adding that the higher the qualification, the less the pay has grown over the last 2.5 decades. It further explained that the median wage for diploma holders had grown the most, both annually and over the entire period, followed by graduates of other qualification levels in ascending order according to the Malaysian Qualifications Framework (MQF). The report also highlighted that the median wage for master's degree holders among sampled entry-level employees had grown at a dismal rate of less than one per cent annually over the period, even before adjusting for inflation. "This is lower than the median growth rate of 1.8 per cent annually for degree holders and 2.1 per cent annually for diploma holders. "This provides early but pivotal evidence that there is a declining return to education in Malaysia, at least in the private sector," the report said. It further revealed that between 2002 and 2022, wages for entry-level workers with lower education qualifications, such as PMR and SPM holders, grew faster than those of workers with higher education. Although higher qualifications generally still lead to higher pay, the increase in starting salaries was more pronounced for those with lower education levels over the past two decades, it said. "The median entry-level salary for secondary education grew the strongest over the 25 years after adjusting for inflation. "The median entry-level wage for those entering the workforce rose by 89 per cent (or 2.6 per cent annually) for PMR holders and 44 per cent (or 1.5 per cent annually) for SPM holders. "In other words, the median entry-level PMR holder entering the private sector for the first time in 2022 was earning almost twice as much as her counterpart in 1997."
