Malaysia’s dreadful graduate labour market

 

The latest data from the department of statistics Malaysia (DoSM) on the graduate labour market under the previous government makes for grim reading.

The number of graduates at the end of 2022 is at a record high of 5.92 million but 2.81 million, or 47.5%, are unemployed, underemployed or outside of the labour force.

This means that nearly half of Malaysian graduates are not in graduate level occupations. One in five are not employed at all.

Among those that are working, one in three are in semi-skilled or low-skilled jobs.

Three out of every four graduates work in mostly low value-adding services and only 14.4% work in high value-adding manufacturing. Only 9% are employers or self-employed, so entrepreneurs are thin on the ground.

The dynamics of graduate employment is also very revealing. Since 2019 the number of graduates has increased by 788,000 with 97.6% of those joining the labour force.

Only 2.9% of new entrants during this period were unemployed but 84% of those who found jobs were underemployed with 7% taking short-time jobs and 77% taking jobs below their qualifications.

The difficult labour market, with high costs of living and little or no social protection, is forcing graduates to take any type of work in order to make ends meet. Higher employment is a sign of economic distress not of economic success.

This is reflected in the wage data where degrees and diplomas make little difference for new graduates.

Average starting salaries for new graduates were RM2,083, down 12% during the pandemic, compared to RM1,808 for everyone else.

Half of new graduates earn RM1,624 or less, down 21% during the pandemic, compared to RM1,527 for others.

So the income premium for new graduates is very low, around RM100-RM200 per month and it takes five to 10 years before there is a significant difference in income between graduates and non-graduates.

The financial gap is clearer when set against the cost of higher education and the income lost while studying.

Four years of study might cost RM30,000 RM40,000 either paid directly or through loans.

During that time someone on minimum wage would earn RM72,000. The lost income and accumulated debt can exceed RM100,000 for graduates whereas their peers who go directly into employment are RM72,000 better off.

When compared with estimates of living wages from EPF’s Belanjawanku and estimates from Bank Negara, wages for new graduates are below the minimum thresholds for a decent income and again wages take many years to reach basic income requirements even for couples.

When looking for the people responsible it is not the students themselves. They have been lured into universities on the promise of better job prospects which they often do not achieve.

The government and regulators have provided multiple policies to support universities which have largely been ignored. They are also not to blame.

Based on my earlier research and the outcomes from recent evidence the most likely cause is a failure of leadership and management in higher education institutions themselves.

Vice-chancellors and owners push for higher student recruitment by promising better careers which they cannot guarantee. At the same time the obsession with higher numbers and revenue often translates into lower quality of higher education which in turn contributes to poor employment outcomes.

This will continue until a new generation of world-class international leaders emerges in Malaysian universities with a new evidence-based vision of the realities of the higher education ecosystem and the graduate labour market.

Unfortunately access to these positions is restricted by patronage, race and nationality so the transition to a better future for graduates may prove a long journey. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.