Why are fresh grads earning less? Lack of digital savvy, recruiters suggest

Boo Su-Lyn
Boutique HR consulting company Human Synergy said some employers refuse to pay fresh graduates competitive salaries because they had a higher risk of quitting and tended to job hop. — Picture by Azneal Ishak

KUALA LUMPUR, April 18 — Fresh graduates’ starting salaries have fallen because they lack digital skills in an increasingly competitive market and a tough economy, recruitment firms and economists have suggested.

Recruitment portal JobStreet.com said the new digital economy has created many new jobs and opportunities, but Malaysia lacked talents with the right digital skill sets to fill those jobs.

“In our recent Job Outlook Report 2019, it is highlighted that the talent landscape will be skewed towards digital skills but there is a limited supply of these skills in the market,” JobStreet Malaysia country manager Gan Bock Herm told Malay Mail.

He also cited a JobStreet.com survey in which 68 per cent of employers complained about fresh graduates asking for “unrealistic” salaries and benefits.

“The job market is becoming very competitive and fresh graduates are competing against other candidates for the same position who may have more working experience that are more aligned to market demands and industry needs.

“Instead of asking for higher salaries, fresh graduates must understand the expected salary level offered for that particular job and adjust their expectations accordingly,” he said.

A Bank Negara Malaysia report recently found a decrease in fresh graduate’s starting wages over the past decade, which the central bank attributed to a lack of high-skill job creation.

A fresh graduate with a diploma could earn a real salary of only RM1,376 in 2018, compared to RM1,458 in 2010, while a Master’s degree holder faced a similar decline in the same period from RM2,923 to RM2,707.

JobStreet.com’s salary report 2019, however, indicated that fresh graduates’ salaries have been “quite consistent” year after year.

“However, the ideal salary for fresh graduates may differ based on their qualifications and the industries that they are in,” said Gan.

Boutique HR consulting company Human Synergy said some employers refuse to pay fresh graduates competitive salaries because they had a higher risk of quitting and tended to job hop.

“This year, the economy is expected to be less robust than before, hence some companies have decided to be cautious on spending,” Human Synergy told Malay Mail.

“Wages usually form the bulk, if not the highest cost in any company’s operating expense. If companies need to maintain cost while ensuring higher output, fresh graduates unfortunately bear the brunt. Companies would rather pay more to attract experienced or skilled workers rather than spending on someone they need to train.”

Human Synergy noted that one of its clients took on a bio-engineering graduate as an HR executive, while another hired a chemistry graduate as a receptionist.

“Both seemed as possibly taking a lower pay than what they are potentially worth.”

Jayant Menon, lead economist (trade and regional cooperation) at Asian Development Bank, said the lack of high-skill jobs for university graduates was only one side of the problem, as many graduates also did not possess skills relevant to businesses.

“This is also why about a quarter of university graduates remain unemployed six months after graduating despite employers complaining about difficulties sourcing talent. This points to a skills mismatch that has its roots in a deteriorating education system that is underfunded and wrought with distortions,” Menon told Malay Mail.

“While Malaysia may be a net importer of labour, it has long been a net exporter of skills, with talent fleeing the country due to home-grown distortions, most particularly an affirmative action programme that has even failed its target group. All of this needs to change, and the current government has the mandate to do so, if only it can find the gumption.”

Sunway University Business School economics professor Yeah Kim Leng pointed to scarce skill sets among fresh graduates on data analytics, artificial intelligence, applications programming and e-commerce, as well as a sluggish labour market due to moderating growth, investment, and business expansion.

“Slow industrial upgrading, weak technological absorption and the labour-intensive nature of industries, particularly the services sector, are some of the factors contributing to the slack market for fresh graduates,” Yeah told Malay Mail.

“On the supply-side, there is an oversupply of liberal arts and general degree graduates and less so in science, technology, engineering and mathematics required by the technology and knowledge-driven industries.

“Even traditional sectors such as banking and finance, wholesale and retail trade and professional services are being reshaped by changing competitive factors which require the skill-sets taught in the new disciplines associated with the digital economy,” he added.

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