More than meets the number
OVER the past two weeks, most of us would have read news reports claiming that 22% of fresh graduates with degrees have been earning between RM1,001 and RM1,500 per month for at least the past 10 years.
At the same time, we would have heard about Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed saying that graduates should be grateful to have jobs despite the lower pay.
A local daily recently reported that based on information on graduates’ starting pay obtained from the database of the Higher Education Ministry, the percentage of fresh graduates getting low pay – near the minimum wage of RM1,100 – has grown from 14% to 22% over the past 10 years.
However, the situation on the starting pay for fresh graduates is NOT as gloomy as it has been made to be. Numbers never lie, but the percentage may give a distorted picture if the denominator or sample is not clearly explained.
The information is based on data collected from respondents who filled up the graduate tracer study at the Higher Education Ministry’s special website, www.great.mohe.gov.my. This website was set up to serve as a one-stop centre to assist fresh graduates to find jobs and also provide information on upskilling and reskilling opportunities.
In Malaysia, there are between 320,000 and 350,000 fresh graduates annually, but only less than 30% of them participate in the tracer study that provides information on graduate starting pay. Only those needing help to find a job – or a better job – would visit this website and subsequently fill up the tracer questionnaire.
For example, in 2020, 15,857 out of a total of 71,108 graduates who responded to the ministry’s tracer survey reported that they earned less than RM1,500. But this is only 5% of the total number of 318,593 graduates in 2020. Even if the number of graduates reported earning less than RM1,500 is doubled to 32,000, it would only make up 10% of the total and not 22% as reported. In short, the denominator will cause the percentage to be biased, but the number remains true.
Nevertheless, the number of 15,857 fresh graduates who reported that they are earning very low wages or close to minimum wage is a real concern. Fresh graduates are expected to earn more than this, but this does not mean they are being discriminated against or are not good. It simply means they are paid according to the profit they can bring to the company at the beginning of their first job.
This is reasonable as every employer needs to test out how much profit an employee will bring to the company. Every rational employer would be willing to pay according to the profit that an employee brings to the company.
Therefore, if the data show that a significant number of graduates’ earnings remain close to the minimum wage after working for more than two or three years, we should be concerned with the quality of higher education and the value of adding a degree to one’s life.
Furthermore, if we look at the median wage of graduates younger than 24 years old in 2016 (as the average age for fresh graduates is 22 to 23 years old), it was RM1,800, but after three years, the median salary for graduates aged 24 to 35 in 2019 increased to about RM3,510.
We can assume that over at least three years, the salaries of our graduates increased by about RM1,700 or 95%. This means that Malaysian graduates are not underpaid and our tertiary education is not failing. It simply takes time for fresh graduates to prove their economic worth.
By digging deeper into the numbers and percentages, we can find that it is true that there are about 16,000 fresh graduates in 2020 who began with low pay, but the percentage of them remaining with low pay may be significantly lower in the long run. To reiterate, numbers don’t lie, but percentages sometimes do.
DR TAN PL Arshad Ayub Graduate Business School UiTM