KUALA LUMPUR: The longstanding perception that fresh graduates are asking for “too much” from their future employers has been brought into sharp focus, with figures suggesting that isn’t the case.
Khazanah Research Institute (KRI), in its School-to-Work Transition Survey (SWTS), showed that fresh graduates actually have a low reservation wage (the lowest pay they are willing to accept) which starts from as low as RM1,555 a month.
The report cited a 2017 Jobstreet Malaysia survey which stated that two-thirds of employers had complained that fresh grads were demanding starting salaries of between RM2,400 and RM3,000.
However, SWTS findings showed that the expected median salary by Bachelor’s degree holders, at around RM1,900, was lower than widely believed, while those with higher qualifications were asking for as little as only RM100 more.
The SWTS noted that the monthly mean income of young workers is RM1,846. For comparison, the present minimum wage in Peninsular Malaysia is RM1,000 and RM920 in East Malaysia. Compared to the minimum wage, it said, the reservation wage of job seekers, most of whom have a tertiary education, does not seem unrealistic.
“It does not seem unrealistic for young people to want a living, fair or decent wage that will allow them to sustain a socially-accepted standard of living beyond the basic necessities like food clothing and shelter,” it said, adding that a minimum wage is not necessarily a living wage.
The Malaysian Trade Union Congress, it said, had also argued that a starting salary of RM3,000 is actually reasonable given the present cost of living for recent graduates, including the need to repay student loans.
The report also cited a 2016 Graduate Tracer Study, which showed that among those already working, the bulk of recent graduates with first degrees earn under RM3,000 while diploma holders earn under RM2,000.
The SWTS said a ‘Cost of Talent’ report issued by international human resources consulting firm Universum Global, concluded that “Malaysian graduates have one of the lowest expectations in the world for starting salaries.”
The report said a review of wage levels and differentials is urgently needed to determine how the minimum wage is being fixed in the country, for example, should it be fixed at the national level or by sector, locality, occupation, employment status or age.
“Such review can be guided by the International Labour Organisation (ILO) Minimum Wage Fixing Convention 1970 (No. 131) which Malaysia ratified in 2016.
“A balanced approach is reflected in the ILO which calls on policy makers to take account of the needs of workers and their families, taking into account the general level of wages in the country, the cost of living, social security benefits, and the relative living standards of other social groups; and the economic factors including requirements of economic development, levels of productivity and the desirability of attaining as well as maintaining a high level of employment,” it said.
The review, it also said, should also consider the likely desirability of establishing a living, fair, and decent wage and not just a minimum wage.