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YOUNG, EDUCATED AND CHEAP:A recent survey shows that fresh graduates are joining the employment market with an average pay of RM2,500 a month and many are struggling to make ends meet. Industry insiders and observers say it is now an employers’ market and employees, especially new recruits, have very little power in demanding the pay they want, writes Tan Choe Choe

ONLINE recruitment agency recently conducted a survey to see how fresh graduates were coping with the cost of living in Malaysia.

It found that the majority of 2,062 fresh graduates surveyed across various industries in March earn a monthly salary that is just enough to make ends meet.

A whopping 77 per cent said their salary did not leave them with any savings after spending on essentials.

When asked what these essentials were, 63 per cent of respondents said car and study loans were their major commitments.

With fuel prices becoming increasingly expensive, they mentioned that transport cost was also among their top expenses.

Jobstreet said an average of RM1,500 was spent on these essentials.

Not surprised by the findings of the survey, Malaysian Employers Federation executive director Datuk Shamsuddin Bardan tells the New Sunday Times that with the current prices of goods and services, their average salary “can hardly sustain a bachelor”.

Increase of retirement age afactor

But fresh graduates must realise that it is currently an employer’s market out there, opines Shamsuddin.

“There is an oversupply of fresh graduates now. It’s especially so since the middle of last year. The basic reason is that when the government increased the retirement age of the private sector to 60, the vacancies that would have been made available from people retiring are not going to be there for the next five years. The fresh grads are basically not in a position to demand.”

Shamsuddin estimates about 200,000 employees are retiring every year, and of the number, some 30 to 40 per cent will be those in executive-level positions.

“That’s about 40,000 to 60,000 vacancies that used to be created by people retiring, and these are no longer available. So, the fresh graduates will now have to compete with those already in the labour market (who are) people with experience. And this makes it tougher for them to enter the labour market.”

Economist Dr Yeah Kim Leng, who is the Malaysia University of Science and Technology School of Business dean, agrees with Shamsuddin that the retirement age has impacted the employability of fresh graduates in the market.

“There’s impact on the upward mobility (of workers), which will affect the new intakes. So, any new intake will have to come from the expansion of businesses.

“Unless businesses can expand, where they will need to expand their labour force... we will see marginal effects from the extension of the retirement age.”

Added to this is the fact that the country has been experiencing depressed wages between 2000 and 2010, according to the World Bank, especially in skilled labour.

“That would include entry-level grads as well. So, the entry-level salaries have actually been stagnant for more than a decade already,” says Yeah.

For certain high-value, high-reach sectors, however, the entry-level pay has moved up to between RM3,000 and RM3,500, indicating that there are some among the spectrum of employers who are able to pay higher entry-level salaries.

“Bigger firms, like multinationals, will generally be paying much higher. But the bulk of it, the SMEs, will still be paying about RM2,200 to RM2,500.”

He says the current wage trend is also a reflection of the general value, growth and productivity of companies operating here.

“That means that firms that are able to grow faster, generate higher value-added products and services that are more profitable, will be able to pay more.”

Yeah thinks Malaysia is not experiencing a rate of growth that will see an immediate absorption of the influx of fresh graduates in the market every year.

“If we grow at a breakneck speed like China, then labour shortage will result in a demand pull for our fresh graduates and they will be able to demand higher wages. But suddenly, there’s a surplus and a lot are not ready to start work immediately — they need retraining.

“So, how can they command better wages?”

But the situation has not stopped most fresh graduates from asking for higher than the average pay during job interviews.

In the survey, an overwhelming 87 per cent do not have any other supplementary income while prices of goods and services continue to scale new heights.

Of those surveyed, 60 per cent expected a salary of RM3,500 for their first job, while 30 per cent thought they would get as much as RM6,500 as their starting pay, a figure which they thought would allow them to “live comfortably”.

True to Shamsuddin’s and Yeah’s observations, found that most employers are not willing to pay an inexperienced fresh graduate more than between RM2,500 and RM2,800 a month.

Nothing wrong with job-hopping

Hence, to cope with the increasing cost of living, fresh grads are always on the lookout for new jobs with a higher salary, says the recruitment agency, and this has created high turnover rates in companies.

But Shamsuddin believes there is nothing wrong with job-hopping.

“It’s enriching. It’s for the employers to try to hold on to the real good performers because the good ones are always in demand, so they will offer and counter-offer. Employers have their own mechanism to retain and attract people to stay on.”

His advice to fresh graduates?

“Because of the type of labour market now, you have to first get the job, irrespective of the salary offered. Then do your level best, show your maximum effort. Wages are performance-driven in the private sector, so if an employee shows true potential, then the pay can be more rewarding.

“It won’t be just a one to two per cent jump. It can be easily RM1,000 or more. There’s also the bonus — some companies can pay up to 10 months. That’s something you can look forward to.”

In the meantime, make some changes in lifestyle, he advises.

“We know that the (repayment for a) car is taking a big chunk of their pay, so they need to think if they really need a car for the time being.

“Some people say it’s necessary, but we should look at the prospects of the public transport now. It’s being upgraded and it’s more consumer-friendly. So, why not make do first?”

He believes there is definitely room for change because some fresh graduates’ lifestyle is close to lavish.

“You don’t really need to buy a new car, for one. A used one will do. And their gadgets — a phone is a phone, you don’t necessarily have to spend so much on a new smartphone.”

His views are echoed by Claire Yap, a human resource manager with a construction and development company in Kuala Lumpur.

“Of course, the cost of living is getting higher, and so is rental. For example, a tiny room for one in Taman Tun Dr Ismail costs RM400 to RM500. But our fresh graduates can still survive, although I think most don’t really save.

“They still go and watch movies and even catch them on IMAX, although it can be as costly as RM40 per ticket. They still go to Starbucks, where one cup of coffee is over RM10. They can still travel overseas for a vacation. I think if they adjust their lifestyle a little bit, survival is not an issue.”

Yap’s company employs a good number of fresh engineering graduates and they are paid RM2,500 and above per month, with a slight increment upon confirmation.

“There are also allowances given for overtime work as well as weekend work. Most of our fresh graduates stay with us.

“Turnover is not an issue,” she reveals, although she admits that the company creates a strong bond with its employees through various training courses and seminars.

Governmentcan step in

To increase entry-level salaries, Yeah believes the government has a role to play — by upping their starting pay.

“The public sector’s starting pay is generally low. So if we were to raise it, it’ll act as competition for the private sector. It’ll set a new benchmark.

“Of course, this will be added costs for businesses, but it’s inevitable as we move towards a high-income and knowledge economy. Salaries have to go up in tandem. Those who can pay will get the best, while those who can’t won’t be able to attract the right talent.”

But the best way to help companies afford better pay to these young graduates is to provide a more conducive investment climate.

“That, above all, should still be the main driver underlying wage increases. It has to be a demand pull, driven by the market.

“So, the government needs to look at encouraging more businesses or industries to be set up; to ensure that entrepreneurship is nurtured and made more dynamic. These will result in the creation of jobs, and will act as a pressure for wages to go up,” adds Yeah.

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