A research report by the Khazanah Research Institute (KRI) revealed that in 2021, 65.6% of graduates earned a starting salary of less than RM2,000 per month.

The 220-page report, titled "Shifting Tides: Charting Career Progression of Malaysia's Skilled Talents," was published on March 4th.

This research was a collaboration between the Higher Education Ministry (MOHE) and KRI, a non-profit research organization under the sovereign wealth fund Khazanah Nasional Berhad.

In a press release accompanying the report, the institute noted that 43.2% of degree holders had a starting salary below RM2,000 in 2022, down from 63.3% in 2010.

"A similar downward trend was observed among diploma holders, with those earning RM2,000 and below decreasing from 93.7% to 78% over the same period," it stated.

In 2021, only 10.8% of fresh graduates secured jobs with monthly salaries above RM3,000. The report also highlighted that nearly 40% of experienced graduates struggled to find well-paid jobs that matched their skillsets.

Additionally, more than one-third of graduates who accepted jobs mismatched with their qualifications remained in such positions over time.

"Starting a career on the wrong foot can have lasting effects on future career trajectories, making 'last-mile' active labour market initiatives crucial for facilitating the education-to-work transition. This could help overcome the underutilization of skilled talents and maximize the return on higher education," said Hawati Abdul Hamid, the lead author of the report.

The report also noted an increasing trend of graduates being overqualified for their initial jobs, often leading them to accept low-paying or semi-skilled positions to avoid unemployment.

In 2021, 48.6% of Malaysian graduates were overqualified for their jobs. Even after more than ten years in the job market, a third of experienced graduates still found themselves overqualified.

"The share of overqualified graduates — those working in jobs requiring lower qualifications — has trended upward from 42.3% in 2010 to 57.3% in 2018, before gradually declining to 48.6% in 2021. This rate surpasses the national average for the tertiary-educated workforce across all age groups, raising significant concern due to its potential long-term impact on the career progression of fresh and young graduates."

Overqualification is more common among fresh graduates compared to experienced ones. While it is typical early in one's career due to a lack of experience and soft skills, it is crucial to address and consider its implications. Prolonged overqualification can significantly impact future career outcomes and progression.

KRI explained that overqualification, resulting from an ineffective education and training system, indicates inefficiencies in utilizing public and private sector resources, as well as in labor allocation. Consequently, skilled talents remain underutilized as employers fail to fully leverage their capabilities, leading to a suboptimal labor market equilibrium.