Wanted: Good prospects and higher pay

Slow-track job: With the low salaries and lack of career mobility at work, many graduates are struggling to survive.

WITH starting salaries of less than RM2,000 and slow salary growth after a few years of employment, graduates lament the lack of career progress.

They say despite having a degree, their salaries are barely enough to cover all of their expenses given the cost of living.

One is audit senior Jennie Lim, who says she was offered a starting salary of RM1,700 in an audit firm in Penang.

“I don’t have any savings at all. The money was never enough to cover my expenses such as car maintenance, insurance, food and fuel. In the end I still had to borrow money,” she says.

Lim adds that her working hours are usually extended beyond office hours with an overtime rate of RM10 per hour. She also feels that the career growth at the firm is rather slow with an annual increment of not more than RM200.

With the low pay and poor prospects, Lim, who did her undergraduate studies in Australia, feels that she had wasted money on her education.

Eric Tan, 30, who is also in the same field, says he was offered a starting pay of RM1,600 and was told it was the “normal rate” for fresh graduates.

However, his salary was just around RM2,200 when he quit his job after five years.

“The money was not enough to cover my PTPTN and car loan. My parents had to help me out,” the Accounting and Finance graduate from Penang says.

He then started working at new company with a salary of RM2,800. It was later increased to RM3,000.

“When I applied for a credit card, my application was rejected as the bank said that my salary was too low for my age,” he adds.

Tan is also concerned that his Employees Provident Fund (EPF) saving is still low for his age.

Nurnina Muhamad from Kuala Lumpur, who sells reconditioned (recond) cars, shares she is paid a basic or RM1,100 despite the minimum wage rate of RM1,200. The 36-year-old Mass Communication graduate says the justification given for the salary is that she lacks experience in car sales.

“Car sales is based on commission. If we sell cars, of course, we get more but if we don’t, then we will have to make do with the basic,” she says.

Despite the commission, her EPF and social security (Socso) contributions are deducted based on her basic pay.

She also laments the salary scale paid today, which she thinks is no different from that when her father started his career a few decades ago.

“Luckily, I live with my parents and that’s why I could save some money and my bills are not that high,” she says, noting that her colleagues who have families face more difficulties.

Meanwhile, a manager at a cybercafe says she is paid RM2,000 and after almost seven years of working, she has not seen any career progress.

“My workload has been increasing. There was no bonus or annual increment, I have been working for almost seven years and received an incentive of RM230 and that was it,” she adds.

Her job scope includes teaching and marketing as well as promotions and doing sales report.

Several people have also been sharing information on their salaries anonymously on an Instagram page called Malaysianpaygap.

A 28 year-old lawyer who has three years’ experience in law posted that she is paid a salary of RM2,000, with no allowance or bonus.

She claims that she started with a salary of RM1,800, which her seniors had argued was the normal rate.

Meanwhile, a 24-year-old civil engineer at a consultant firm with one year experience claims that she is paid RM1,500.

“I think I’ve been underpaid and I am now looking for a new job. I cannot save much I am barely living,” she adds.

However, accounts on Malaysianpaygap vary as some people are highly paid while others are underpaid despite being in the same field of work.

Challenging times

According to the Department of Statistics of Malaysia (DOSM), graduates aged 24 and below received a mean monthly salary and wages of RM1,949 in 2020 compared to RM2,367 in 2019 due to lack of working experience.

In 2020, graduates with more than five years of employment received mean monthly salaries and wages amounting to RM3,371. This is lower than the mean monthly salaries and wages for this group in 2019, which amounted to RM3,955.

Malaysian Employers Federation(MEF) president Datuk Dr Syed Hussain Syed Husman says starting salaries are based on industries and the job.

“Fresh graduates are paid the starting pay based on the industry and the job they do. Generally, industries that suffer from the movement control orders and shutdowns (during the pandemic) faced cash flow issues and challenging financial capacity and tended to pay lower starting salaries to fresh graduates,” he explains.

Most micro-small and medium enterprises (MSMEs), which constituted about 98% of all companies in Malaysia, are within this category of companies that pay lower starting salaries.

Larger companies, multinational companies, government-linked companies and government-linked investment companies all have fixed entry scales for fresh graduates, he says.

“Thus, based on the interests of the fresh graduates, those bigger companies fixed the starting pay for fresh graduates based on their financial positions,” he adds.

The Covid-19 pandemic has pushed SMEs into severe financial constraints and employers are on survival mode, Syed Hussain notes.

Many businesses have had to embark on measures such as retrenchment and pay cuts to sustain themselves, he says, citing statistics that showed 107,024 employees were retrenched in 2020, while 60,000 were laid off in 2021.

“Some employers carried out pay cuts ranging from 10% to 50% in 2020 in order to survive the Covid 19 pandemic. Covid 19 pandemic is not a normal situation and his has never happened before. With the current economic situation and the recent floods, the economic recovery will take a longer time,” he says.

“But no employer wants to pay less for a job done if the employer has the financial capacity to do so. MEF believes that many employers and employees have discussed the best options available to ride this wave of difficulties arising from Covid 19 pandemic and the big floods.”

Still, Syed Hussain says a degree no longer guarantees a starting salary of over RM2,000 a month.

“Fresh graduates also need to be realistic about their expectations on the starting pay offered by prospective employers. Fresh graduates should not reject outright job offers by employers even the starting pay is far below the expectations.

It must be noted that starting pay is not going to be for long as if the employee proves to be an asset to the company, the company will be prepared to review the salary even without waiting for the service to reach one year of joining the company,” he adds.

Structural factors

There are a few factors in determining the level of wages, says Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid.

“The need to have a minimum wage policy suggests that the labour market may not be efficient enough to determine the right level of salaries and wages. So, there is a market efficiencies issue,” he points out.

The other is the level of economic activities engaged by businesses that revolve around the low value-added activities that may require unskilled workers.

“This is premised from the number of jobs vacancies that are skewed towards unskilled employment,” he explains.

He notes the total job vacancies for 2021 stood at 2.5 million but 42% of the jobs were in elementary occupation, as plant and machinery operators and assemblers as well as in clerical works.

Labour intake and salary levels are commercial decisions, Mohd Afzanizam says, adding that salary considerations will also hinge upon the level of profitability that the businesses can make as a result of taking in those new employees.

“Therefore, ensuring that the business landscape remains competitive and fair could be the prerequisite for a higher income for employees. In some sense, reducing red tape and bureaucracy for setting up a new business as well as maintaining the existing business are also crucial so that the compliance cost is lower,” he says.

This will allow more resources to be effectively channeled to hiring skilled and knowledgeable workers in order to improve productivity, enhancing market share and being able to record respectable profit growth,” he adds.

Ultimately, he says, the issue is not really straightforward.

“It requires the right policy, buy-in among the stakeholders and the right attitude.”

However, he notes that the graduates’ concerns of low salaries are valid, and concedes that it could be demotivating for them.

“The graduates would be questioning their motives to further their studies, whether it was the right move or otherwise, given the current circumstances.

“However, one will really need to understand the role of education in our lives. It’s about being a better person because knowledge will help and steer us to make good decisions,” he says, advising graduates to take up a new skill to meet the post-pandemic challenge.