RM1,700 minimum wage not a benchmark for grads, says MEF

The employers federation says businesses are prepared to pay more when graduates can show they are job-ready and able to contribute quickly.

Higher pay is typically offered in high-demand sectors such as technology, engineering, finance and healthcare, says the Malaysian Employers Federation. (Envato Elements pic)

PETALING JAYA:

 It is unrealistic to expect a standard starting salary across the board for graduates, says the Malaysian Employers Federation.

Its president, Syed Hussain Syed Husman, said higher pay was typically offered in high-demand sectors such as technology, engineering, finance and healthcare, while labour-intensive sectors and smaller businesses operated on tighter margins.

Syed Hussain Syed Husman.

Starting salaries for fresh graduates cannot be reduced to a single benchmark such as the RM1,700 minimum wage, as employers juggle with various factors, he said.

Employers were prepared to pay more when graduates could show they were job-ready and able to contribute quickly.

Syed Hussain was responding to remarks by human resources minister Steven Sim on Monday that the RM1,700 minimum wage was a safety net for basic, low-skilled roles and “not a starting salary” for fresh graduates.

He said a person’s wage should be linked to productivity, skills, and value creation, while the salary structure for graduates should reflect job complexity, required competencies, sector conditions and the financial health of employers.

“Fresh graduates are not employed based on minimum wage considerations, but according to the expected productivity level and the cost of preparing them for the role,” he said, adding that employers were also grappling with higher compliance and operating costs, as well as thin profit margins, among others.

Yeah Kim Leng.

Sunway University economist Yeah Kim Leng said an oversupply of graduates in some fields, coupled with low productivity and a reliance on low-skilled foreign labour, continue to suppress wages, with many firms unable to raise salaries much beyond the statutory floor.

“The minimum wage sets the floor and if there are more job seekers in the market than available positions, then employers will have stronger bargaining power to recruit employees that are not so demanding in wages,” he said.

Yeah said many factors contributed to flat wage growth, including low value-added activities in global value chains, skills mismatches, heavy dependence on low-skilled foreign workers and the prevalence of SMEs operating on thin margins.

“Depressed wages coupled with rising cost of living also result in workers being unable to focus on upgrading their skills, thereby causing a vicious cycle,” he said. - FMT