FRESH graduates who entered the job market last year earned lower starting salaries compared to those who joined the previous year, said the Statistics Department.

In a Covid-19-hit economy, the fresh graduates are earning salaries comparable to the minimum wage.

At the same time, there were fewer graduates entering the job market in 2020, said chief statistician Dr Mohd Uzir Mahidin.

There was also a drop in the labour force participation rate (LFPR) among young graduates, he added.

“(New) degree graduates recorded a decrease in monthly income where the majority of them earned between RM1,001 and RM1,500 in 2020 compared to RM2,001-RM2,500 in 2019.

“At the same time, the monthly income of Malaysian PhD and Master graduates in 2020 remained in the range of RM5,001-RM10,000, while diploma graduates were the majority in the range of RM1,001-RM1,500,” Uzir told The Malaysian Insight.

The minimum monthly wage is RM1,200 and the minimum hourly wage is RM5.77 in Malaysia. The Statistics Department is still studying the pandemic’s impact on the status of salaries or wages in Malaysia.

Uzir added that according to the Global Wage Report 2020-2021 by the International Labour Organisation (ILO), during a crisis or economic downturn, average wages can be skewed by the “composition effect” of changes in employment.

“When most of those who have lost their jobs are low-paid workers, this increases the average wages of the remaining employees.”

Malaysia is not the only country that is affected by the pandemic, Uzir said.

He said early data showed about two-thirds of countries saw slower average wage growth in the first half of 2020.

In terms of the number of fresh graduates released in 2020, the Graduate Tracer Study conducted by the Ministry of the Higher Education revealed it decreased to 318,593 graduates compared to 346,686 graduates in 2019.

“Malaysian graduates comprised 95.8% (305,301) in 2020, a 7.6% drop compared to 2019 (330,557),” Uzir said.

“The graduates’ employability, which encompassed employment, continued study, skills improvement and waiting for a job placement, was at 84.4%.”

Meanwhile, the LFPR in 2020 rose to 83.9% compared to 83.5% in 2019, he added.

“However, for the young age group of 24 years and below, LFPR was at 64.8% in 2020 compared to 70.2% in 2019,” Uzir said.

Higher rate of underemployment

Benedict Weerasena, an economist at independent research institute Bait Al Amanah, said that the graduates’ employability at 84.4% was still high despite a slight drop from 86.2% in 2019.

“In fact, the graduate employability rate in 2020 is higher than in 2016 (77.3%), 2017 (79.1%) and 2018 (80.2%).”

Nonetheless, he said, that the rate was unable to capture the underemployment issue from the economic downturn due to the pandemic and movement restrictions in the past year.

“For instance, how many of these graduates are working temporary jobs or on reduced hours? How many graduates have no choice but to work in low paying or low skilled jobs which do not align with their qualifications?”

Weerasena said the breakdown of the salary range among the level of graduates in 2020 had asserted the possibility of a higher rate of underemployment.

“More degree graduates in 2020 fall into the lower salary scales compared to the year 2019.

“For instance, 53.6% earned below RM2,000 in 2020, compared to 50.7% in 2019. Also, 35.2% earned below RM1,500 in 2020, compared to 32.6% in 2019.”

Possible explanations for this occurrence was that more fresh graduates were working in lower-paying jobs as unable to find a job in their chosen field, or that they worked fewer hours than was necessary for a full-time job, he said.

“The lower salary scales magnify a growing problem where more fresh graduates will struggle to make ends meet,” Weerasena said.

Previously, economists had pointed out that the career prospects of fresh graduates in Malaysia were unlikely to improve soon due to the longstanding, structural problems such as job mismatch and underemployment. – April 1, 2021.