Bank Negara’s annual report for 2018, released on March 27th shows that starting salaries in 2018 for diplomas, basic degrees, honors’ degree, and master’s degree holders have fallen from 2010 levels.

For instance, a fresh graduate with a diploma earned a real salary of RM1,376 in 2018, a drop from RM1,458 in 2010 and a master’s degree holder earned a real salary of RM2,707 in 2018, also a decline from RM2,923 in 2010. 

Mostly the dip in the starting salaries as happened because of the lack of high-skilled job creation. 

The Central Bank shared, “Despite obtaining a high level of education, employees had to settle for jobs that typically do not require such education levels.” 

The bank added that with an ample supply of graduates and limited demand for them by firms, graduate salaries have faced downward pressures.

With the talent in Malaysia earning less than other workers in benchmark economies like Singapore, UK, US , and Australia Bank Negara fears that the future generation of Malaysia might have a lack of will to pursue higher education. 

One way that the Central Bank suggests the problem can be controlled is by attracting new quality investments from both foreign and domestic firms, pivoting away from the low-cost business model. 

Another way in which companies can bridge the gap between labor mismatch is by working more closely with these educational institutions from the beginning. The talent will be able to understand the required skills for available jobs in advance and will be able to prepare in that direction. On the other side, the businesses will be able to get a grip on the potential and the capabilities they have to prepare the jobs for. 

A partnership between education (colleges, universities) and companies, could be the solution to the problem of labor mismatch.