KUALA LUMPUR, Dec 12 — Malaysia-based multinational companies offer the lowest starting salaries, a far cry from that offered by the civil service, a survey conducted by Khazanah Research Institute (KRI) found.
Salary data compiled for the School To Work Transition Survey (SWTS) showed that the maximum median income offered by multinationals to a postgraduate is RM1,250, a meagre sum when put next to popular views about the kind of pay expected from foreign companies.
The quantum is similar to that offered to undergraduates or those with, a qualification considered to be inferior to university degrees, KRI said.
That is over RM4,000 less than the starting pay offered by the civil service or government agencies and RM600 less by public-listed companies.
The SWTS also found that even the starting salary offered by small family-run enterprises was higher, at RM450 more.
This may partially explain why civil service jobs are the main choice for employment for most young job seekers, KRI said in its report that aims to give policymakers, employers and job seekers a better picture of the labour market.
“Public sector agencies offer the highest salaries for each educational level — this would partly explain why it is the preferred employment sector for young people,” the report said.
The finding, which KRI described as “unexpected”, underscores the deeper structural problem beleaguering the job market today.
Supply of graduates now far exceeds demand and employers continue their preference for cheap labour as skills and requirements are mostly mismatched thanks to an education policy that over-emphasises paper qualifications.
This problem is best captured in the large salary gap offered to fresh job seekers with different sets of skills within the civil service itself, namely in the low pay offered to applicants with TVET qualifications, skills heavily promoted as useful even by the government.
The SWTS showed that TVET graduates are paid RM3,000 less than those with a degree and just RM500 more than for school leavers, who tend to take up most of the low-skilled manual jobs.
Despite publicity promoting vocational training as a gateway to good jobs, TVET qualification is still seen as inferior and better-suited for low-paying jobs.
KRI noted parents or students continue to shun vocational training, only to learn later that most employers value TVET skills today. Only 13 per cent of all upper secondary students are pursuing technical or vocational courses at the secondary level, and just 9 per cent at polytechnics.
“It has often been noted that students and their parents regard TVET as an inferior educational pathway, ‘dead end’ and for the academically challenged,” the report said.
“But, in fact, the SWTS found that both young job seekers and young workers consider TVET as the most useful qualification for getting a good job the salary differential could be an important reason.”
Demand for TVET graduates is proportionally high in the private sector among sole proprietors, private limited companies and particularly private contractors, the SWTS showed.
Even for low-skilled or manual jobs, public listed companies and the civil service indicated a preference for TVET graduates.
Yet only government agencies have offered TVET graduates the highest starting pay, at a median maximum of RM4,052 followed by private contractors at RM1,700.
The difference in salaries offered in other enterprises categorised in the report — private limited companies, family business, sole proprietorship, public listed and multinational companies — are more or less around the RM200 median average.
All this points to a disconnect and skewed labour market that is overcrowded with job seekers who mostly have skills that are low in demand, resulting in high graduate unemployment, KRI said.
“The shortage is not in terms of numbers but mismatch is evident employers rate soft skills and work experience above the academic and professional qualifications that are emphasised by Malaysian education and training institutions,” the report noted.
The SWTS, conducted at the end of 2017 and beginning of 2018, was intended to collect education and labour market information on youth, defined as ages between 15 to 29.
The survey was based on five structured, mainly pre-coded questionnaires targeting youth in upper secondary schools, in tertiary education, young job seekers, young workers and employers.