A research report by Khazanah Research Institute (KRI) has revealed that 65.6% of graduates in 2021 earned a starting pay of below RM2,000 a month

The 220-page report, titled Shifting Tides: Charting Career Progression of Malaysia’s Skilled Talents, was published yesterday, 4 March.

The research was conducted in collaboration between the Higher Education Ministry (MOHE) and KRI, a not-for-profit research firm under sovereign wealth fund Khazanah Nasional Berhad.

In a press release accompanying the report, the institute stated that 43.2% of degree holders had a starting pay below RM2,000 in 2022, a decrease from 63.3% in 2010.

“A similar downward trend is also observed for diploma holders, with those earning RM2,000 and below dropping from 93.7% to 78% during the same period,” it said.

Only 10.8% of fresh graduates secured a job with a monthly salary above RM3,000 in 2021.

Below is a graphic showing the starting pay of graduates across different fields:

The report also noted that nearly 40% of experienced graduates struggled to secure well-paid jobs that aligned with their skillset

Additionally, more than one-third of graduates who accepted jobs that did not match with their qualifications had remained in that situation over time.

“Since starting one’s career on the wrong foot could have enduring effects on future career trajectory, ‘last-mile’ active labour market initiatives are important to facilitate the education-to-work transition.

“This could ultimately overcome the underutilisation of skilled talents in driving the nation’s development and maximise the return to higher education,” said Hawati Abdul Hamid, the lead author of the report.

In addition to struggling to find a job that matched their skills, KRI also noted that graduates were increasingly overqualified for their initial jobs.This situation often led many to accept low-paying or semi-skilled positions to avoid unemployment.

The data indicated that 48.6% of Malaysian graduates were overqualified for their jobs in 2021.

Even after more than ten years in the job market, some experienced graduates still find themselves overqualified, with a third of them facing this issue.

“The share of overqualified graduates — those working in jobs that require lower qualifications — has been trending upward from 42.3% in 2010 to 57.3% in 2018, before gradually declining to 48.6% in 2021.

“This rate surpasses the national average for tertiary-educated workforce across all age groups, raising significant concern given its potential long-term impact on the career progression of fresh and young graduates.

“Overqualification tends to be more prevalent among fresh graduates compared to experienced ones. While this phenomenon may be common early in one’s career due to lack of experience and soft skills, it is crucial to address and consider its implications. Prolonged overqualification can significantly impact future career progression and outcomes,” read the research.

KRI explained that overqualification stemming from an ineffective education and training system signifies inefficiency in utilising public and private sector resources, as well as in labour allocation.

As a result, skilled talents remain underutilised as employers fail to fully leverage their capabilities, resulting in a less-than-optimal labor market equilibrium.

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