This article first appeared in The Edge Malaysia Weekly on April 12, 2021 - April 18, 2021

ONLY 8.8% of workers in Malaysia are paid a basic salary that is below the minimum wage of RM1,200 per month. Statistics from the Employment Insurance System (EIS) show that 62.5% of workers, including graduates — hired in the third and fourth quarters of 2020 — received basic wages ranging from RM1,200 to RM1,499 a month.

The statistics were issued in a statement by Minister of Human Resources Datuk Seri M Saravanan last Friday following a report last week by news portal The Malaysian Insight that quoted the chief statistician of Malaysia, Datuk Seri Dr Mohd Uzir Mahidin, as saying that fresh graduates who entered the job market last year earned lower starting salaries compared with those in 2019 — with some even earning below the minimum wage.

Uzir was quoted as saying that fresh graduates with a degree saw a decrease in monthly income, with the majority of them earning between RM1,001 and RM1,500 in 2020 compared with RM2,001 and RM2,500 in 2019. He also said the monthly income of diploma graduates were between RM1,001 and RM1,500 in 2020, while those of Malaysian PhD and Master’s graduates remained in the range of RM5,001 to RM10,000 in 2020.

In his statement, Saravanan said the concentration of wages at the RM1,200 to RM1,499 per month range can be attributed to three factors, namely stronger demand for non-graduate jobs, location and cyclical unemployment due to the Covid-19 pandemic.

The minister also said the pandemic has a varying impact on the sectoral and employment growth in the country’s labour market, where wages for some occupations have increased, declined or remained stagnant. “Data from the EIS, Social Security Organisation (Socso), shows that the monthly average of wages in the economy in 2020 has risen 4.4% from the average of RM2,519 to RM2,631.”

He added that during the year, the monthly wage brackets of RM1,000 to RM2,999 and RM1,000 to RM1,499 experienced a growth of 1.2%, while the monthly wage bracket for RM3,500 to RM3,999 remained stagnant. Meanwhile, monthly wages below RM1,000 experienced a decline in growth.

In the fourth quarter of 2020, the labour supply was dominated by jobseekers with tertiary education, representing 45.5% of total jobseekers. However, the majority or 70% of vacancies offered by employers were for non-graduate jobs.

“With a shortage of vacancies for graduate occupations, jobseekers with tertiary education are most likely to opt for non-graduate jobs such as clerks, sales assistant, admin assistant, customer service and the like as a temporary measure until the economy fully recovers with more job opportunities for the professionals, managers, executives and technicians category,” said Saravanan.

However, he said the Ministry of Human Resources (MoHR) is confident that the number of graduate jobs and wage rates will improve as the economy moves towards stabilisation. “Hence, the MoHR sees the issue of new graduates receiving lower pay in 2020 than in 2019, with some getting lower than the minimum wage, as a temporary situation.”

The MoHR, through its agencies such as Socso and the Human Resources Development Fund, is actively implementing government initiatives to stabilise the labour market and facilitate jobseekers and the unemployed to obtain jobs. These include hiring and training programmes under PenjanaKerjaya as well as regular open interviews and PenjanaKerjaya career fairs.

Socso has also been directed to analyse and publish insights on the actual 160,000 job placements implemented for jobseekers throughout 2020, including the breakdown of placements for jobseekers with tertiary education.

Recruitment agency Randstad Malaysia acknowledges that fresh graduates are feeling the pressure of securing a job during these unprecedented times.

“They not only have to compete with each other but also with more experienced professionals who have rejoined the job-seeking market,” says Randstad Malaysia head of operations Fahad Naeem.

“As a cost-control measure, employers are lowering the starting salary, which may impact a worker’s salary legacy in the long run. Some jobseekers who do not have a good financial safety net may accept jobs that they are overqualified for and with a lower salary as an interim solution.”

He adds that while this is not an ideal situation for the workers, it indicates that hiring activities will resume very quickly once the economy starts to recover. “Businesses would want to leverage the recovery market to expand, and this group of people who settled for a job may return to the labour market to seek better employment.”

However, it is not all doom and gloom in the labour market, as Randstad finds that there are several industries and companies that are expanding their services due to increasing market demand and digitalisation.

“The tech industry has grown significantly in the past year. Areas like banktech and fintech, e-commerce, software-as-a-service (SaaS), robotics process automation, cloud computing and blockchain are hiring new talent. This growth has also increased the hiring demand in other industries such as manufacturing, supply chain and logistics as well as banking and financial services.

“Fresh graduates with good technical background and internship experience should find it slightly easier to secure employment than their peers. When overall business sentiment improves, which will stem from a successful vaccination rollout programme and resumption of business activities, companies will start to hire new talent to capitalise on the recovering economy,” says Fahad.

While salaries are obviously a critical employee value proposition to consider, it is more important for employees of all ages to adopt a lifetime learning mindset, he adds. “Through upskilling and reskilling, workers in Malaysia have the opportunity to drive growth in the future of work, which can be found in the digital economy.”

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