US$700 'too much' to ask: What’s keeping the starting pay of Malaysia's fresh graduates low?
Recent graduate employment surveys cast a gloomy outlook for Malaysia’s fresh graduates, with nearly two-thirds of degree holders earning less than RM3,000 as their starting salary.
Andy Yap (first from left) and Howard Ng (right), who graduated last year from Asia Pacific University of Technology and Innovation in Malaysia and University of Reading Malaysia respectively. (Photos: Andy Yap, Howard Ng)
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KUALA LUMPUR: Andy Yap spent around four difficult months job hunting with no success after graduating in September last year.
The 23-year-old computer science graduate from the Asia Pacific University of Technology and Innovation in Malaysia told CNA that he was often warned by hiring managers that his expected starting salary of RM3,000 (US$708) was “too much”.
While he eventually landed a software engineer role with a starting pay of RM4,000 a month, he said that some of his friends with engineering degrees found jobs with starting salaries of “just above RM1,000”.
''I would say that I feel grateful, especially after searching for so long and spending so much effort," he told CNA.
The struggles of young graduates like Yap have once again come under the spotlight amid renewed debates on Malaysia’s underemployment crisis.
A recent report by a labour market research group revealed that over 65 per cent of fresh graduates in the country earn less than RM3,000.
According to the “Gaji Cukup Makan” Economy report, released in May by Future Studies Berhad, this includes graduates with bachelor’s, master’s and PhD degrees, citing data from the Ministry of Higher Education’s Graduate Tracer Study.
CNA has reached out to the report’s authors for further details on the survey methodology and the number of graduates involved in the study.
“Gaji Cukup Makan” in Malay translates literally to “salary enough (only for) food”, referring to a wage level that covers only basic living expenses, leaving little to no room for savings, investment or discretionary spending.
The troubling pattern reflects a recurring trend highlighted in the Finance Ministry’s Economic Outlook Report released last October, which showed that more than 50 per cent of fresh graduates have been drawing a monthly starting salary of below RM2,000 over the past decade.
Unlike the "Gaji Cukup Makan" report which covered only degree holders, the Finance Ministry’s survey also includes diploma graduates.
“This stagnation leaves them struggling to cover basic expenses, forcing difficult lifestyle compromises, opting for home-cooked meals over dining out or settling for more affordable housing in less desirable locations,” human resource (HR) consultant Diana Khairuddin from HR Edge told CNA.
“It’s a system that’s clearly out of sync with today’s economic realities and in urgent need of reform,” said Diana.
According to the Employees Provident Fund, the monthly expenses for a single individual without a vehicle range from around RM1,530 in Alor Setar, Kedah to RM1,930 in Klang Valley, Malaysia’s bustling economic and urban hub.
Another graduate from the Class of 2024, Howard Ng, 23, told CNA that his monthly salary of about RM3,000 is “barely enough” to cover his expenses, often leaving him stretching his budget and running a deficit just to get by.
“A third of my salary goes to paying rent, the rest pays for daily necessities, especially food … thankfully I am not currently paying off student loans,” said the global occupier services executive who graduated from the University of Reading Malaysia.
Another graduate from INTI International University who did not want to be named also told CNA that she was “disappointed” with her starting basic salary of RM2,400 as a physiotherapist, which she said is within the range of RM2,200 to RM2,800 that her peers in the same line are getting.
She added that she counts her blessings that she is staying with her brother, which helps reduce her living expenses.
“At the moment, I only need to cover costs such as parking and car maintenance,” she said.
Former Bank Negara governor Muhammad Ibrahim said early this month in an interview with local news outlet Sinar Harian that university graduate salaries should be closer to RM7,000 to RM8,000 a month when adjusted for a 5 per cent annual inflation rate.
CNA takes a closer look at the factors behind the fresh graduates’ low starting pay and how more can be done to tackle the problem.
“MANY HIGH-SKILLED JOBS ARE ALREADY SATURATED”
One of the authors of the “Gaji Cukup Makan” report, Mohd Yusof Saari, who is a former chief labour market economist at the Ministry of Human Resources and Emiratisation in the United Arab Emirates, told the New Straits Times that the report revealed a deep structural crisis between higher education and employment, with tertiary education no longer guaranteeing high wages.
The report also found that 70 per cent of fresh graduates in Malaysia are in semi-skilled or unskilled jobs.
Semi-skilled roles include clerical, service, and sales positions, while low-skilled roles cover occupations in agriculture and fisheries, crafts and trades, plant and machine operators and other elementary tasks.
According to Malaysia's Department of Statistics, skilled roles include managers, legislators, professionals and technicians.
Earlier findings by the department found that 36.8 per cent, or almost 2 million, of Malaysia’s tertiary-educated workforce were underemployed as of the third quarter of last year.
The department noted that only 17 per cent of new jobs were considered high-skilled, the New Straits Times reported.
CNA earlier reported that Human Resources Minister Steven Sim had identified three employment paradoxes in Malaysia – stagnant pay as well as skills and jobs mismatch.
The paradoxes centred around how the country shows “positive” statistics in unemployment and the number of graduates produced, but struggles when it comes to wages, underemployment and the availability of high-paying jobs.
Sim noted that Malaysia produces 300,000 graduates every year, but with only 50,000 high-paying, skilled jobs available.
Diana, the HR consultant, told CNA: “We are seeing a surge of degree holders entering the job market, but the reality is that many high-skilled roles are already saturated.”
Career consultant and founder of SY Professional Review Sharifah Hani Yasmin added that such a situation “creates an intensely competitive market that drives down starting salaries and weakens young professionals' bargaining power”.
Another report by the Permodalan Nasional Berhad Research Institute analysing entry-level salaries in Malaysia from 1998 to 2022 in the private sector found that the wage gap between those with tertiary education and secondary education has steadily narrowed.
The survey found that in 1997, degree holders earned 2.7 times more than SPM holders, but by 2022, the gap had narrowed to 1.7 times.
SPM is the equivalent of Singapore’s O-Levels.
“When graduate salaries are barely distinguishable from those of non-graduates, investing in higher education is no longer a guaranteed path to social mobility, it has become an economic risk,” Mohd Yusof told the New Straits Times.
His report highlighted how this is especially so for low and middle-income households burdened by rising education costs.
SHAPING WORK-READY GRADUATES
Arulkumar Singaraveloo, chief executive officer of the Malaysia HR Forum, which trains human resource professionals and organisations, told CNA that employers have expressed concerns over the quality of Malaysia’s graduates.
This stems from outdated curricula and a lack of essential skills, which results in perceptions that many are not work-ready.
Concurring, Sharifah added: “Many graduates also lack industry exposure – internships and hands-on work experience – which leaves them ill-prepared to meet employer expectations or justify competitive salaries.”
The physiotherapy graduate who spoke to CNA on the condition of anonymity shared that academic training alone had not fully prepared her for the realities of working life.
“One of the main challenges I’ve faced is in communication, especially when interacting with different types of patients … I’ve come to realise just how important clinical experience is in developing confidence and competence in this field,” she said.
She told CNA that her course involved only short-term clinical postings with patients, which were not sufficient to develop deeper physio-patient interactions and soft skills that are critical for the job.
She believed that these limitations might have an impact on her seeking better remuneration in her role as a physiotherapist.
Experts said that there needs to be a systemic and coordinated approach involving labour policies, education reforms and economic shifts through “strong public-private partnerships”.
Arulkumar said that this would mean integrating employer input into curriculum development and promoting modular, industry-relevant learning that reflects evolving workforce demands.
“Internships should be more meaningful and structured, ensuring they provide genuine work exposure and act as a clear transition pathway into full-time employment,” he said.
Besides preparing graduates to be work-ready, experts also highlighted the need for structural economic reforms to generate high-value jobs and drive sustainable wage growth.
Sharifah, who is also a freelance recruiter at A Job Thing, said that Malaysia needs to “aggressively develop” high-impact industry ecosystems by doubling down on initiatives like the New Industrial Master Plan 2030 (NIMP 2030).
NIMP 2030, announced in 2023, is a seven-year industrial policy for the manufacturing and manufacturing-related services sector. Some of its key goals include growing employment by 20 per cent to create 3.3 million new jobs.
“By attracting investment in future-forward sectors, such as semiconductors, clean energy and biotechnology, we can generate a pipeline of well-paying, high-skilled jobs that local graduates can actually fill,” Sharifah told CNA.
Besides creating more high-skilled jobs, HR expert Arulkumar said that the government should introduce targeted incentives such as wage subsidies or hiring grants for employers who take in fresh graduates for high-skilled roles.
Sharifah said that this type of grant should be tied to measurable outcomes such as wage growth and workforce upskilling in order to ensure that the support goes to companies driving real progress, “not just those expanding numbers on paper”.
“Malaysia must prioritise industrial upgrading by promoting sectors with higher value-add and innovation to boost demand for skilled talent,” Arulkumar added.
Authors of the "Gaji Cukup Makan" report have also proposed that the government introduce advisory wage guidelines to address wage suppression.
Arulkumar said that while such guidelines can be helpful to establish baseline expectations for fresh graduate salaries, especially in high-cost urban areas where living expenses are significantly higher, the guidelines must be flexible and non-prescriptive to avoid distorting market dynamics and discourage hiring.
“For them to be effective, they should be sector-specific and reflect actual graduate capabilities and job complexity rather than being solely based on academic qualifications,” he said.
“While wages should largely be shaped by market forces, well-designed advisory guidelines, complemented by broader industrial upgrading, can help to ensure a fairer and more transparent transition into the workforce for young talent.”
WHAT’S AT STAKE WITH MALAYSIA'S PERSISTENT UNDEREMPLOYMENT?
Arulkumar said that persistent graduate underemployment risks creating a vicious cycle of low wages, wasted talent and declining confidence in higher education.
“Over time, this (persistent underemployment) could widen inequality, push talent overseas and undermine Malaysia’s goal of becoming a high-income nation,” Arulkumar told CNA.
Over the years, many Malaysian graduates and skilled workers have considered working in other countries for better job prospects, attractive salaries and an advantageous exchange rate.
Authorities have flagged such “brain drain” as a concern for the nation, urging a push to ensure Malaysians return to their homeland after work experience abroad.
Besides concerns about brain drain, Arulkumar warned that persistent underemployment would also burden and pressure the government to assist these graduates or even absorb them into the “already bloated civil service”.
“Unless there is a coordinated shift where academic institutions redesign programmes around real industry and companies take ownership of talent development, I believe this pattern (of underemployment) will continue to repeat,” Sharifah told CNA.
“A generation stuck in a cycle of underemployment, career frustration and stagnant income is not just a graduate issue, it is a national one.”
