There are just too many graduates in Malaysia who are overqualified for the opportunities available on the market, which forces them to choose low- or semi-skilled positions with low starting salaries.
“Since starting one’s career on the wrong foot could have enduring effects on future career trajectory, ‘last-mile’ active labor market initiatives are important to facilitate the education-to-work transition.
“This could ultimately overcome the underutilization of skilled talents in driving the nation’s development and maximize the return to higher education,” said the report’s lead author, Hawati Abdul Hamid, in an accompanying press release.
According to the research, only 43.4% of graduates were working in positions that matched their qualifications.
“Fresh graduates are increasingly overqualified and often face a wage penalty, implying that many resort to accepting low or semi-skilled jobs with low starting pay to avoid unemployment,” the report said.
Notably, from 46,596 in 1980 to 1.2 million in 2020, the number of students enrolled in postsecondary education has increased about 26 times in the last three decades.
However, there is a mismatch between supply and demand.
As of 2022, only 24.9% of full- and part-time positions that required high levels of competence were filled.
“Regardless, the creation of new high-skilled jobs has been underwhelming even with various initiatives outlined under the development plans.
“Only a quarter of total jobs are high-skilled and the share has remained flat over the years,” KRI said in its report.
Overqualification was also a problem in high-skilled employment, with about half of experienced hires being overqualified for their current roles.
However, overqualification and a mismatch in abilities are not the only problems hindering professional advancement and the weak labor market.
According to the report, there has been no pay rise in the last ten years.
“65.6 percent of graduates in 2021 earned a starting pay below RM2,000,” KRI said in its report, and only 10.8 percent earned more than RM3,000.
The figures for 2021 are comparable to those from 2010 when 72.5% of graduates made less than RM2,000 in their first year of employment.
“Wage stagnation also lingers around Malaysian skilled talents despite having several years of work experience and being employed full-time,
“A low starting pay anchors down salary growth throughout graduates’ careers,” KRI said in the report.
Furthermore, the research center defined 55.9% of graduates’ 2021 employment as “non-standard employment,” which included contract or temporary work, part-time work, and self-employment.
In less than a decade, the percentage of individuals with tertiary education working in non-standard jobs doubled, rising from 8.6% in 2013 to 15.8% in 2021.
“The share of graduates in full-time permanent jobs have been declining, from 53.2 percent in 2010 to 44.1 percent in 2021,
“Over half of working graduates intend to change jobs, suggesting high levels of dissatisfaction mainly driven by overqualification, low pay, and non-standard employment,” the research institute said.
Since non-standard jobs lack social safety and have unpredictable income, the large percentage of graduates working in non-standard employment prompted concerns beyond the labor market and professional advancement.
Under Khazanah Nasional Berhad, the Khazanah Research Institute is a non-profit analytical and research organization. It reveals the country’s most critical problems and offers doable policy suggestions.
