KUCHING: Malaysia’s graduate mismatch debate is missing the real pressure point, with entry-level wages still not reflecting skills, productivity and living costs.
Universiti Malaysia Sarawak senior lecturer at the Faculty of Economics and Business, Dr Dzul Hadzwan Husaini, said the issue must be read within Malaysia’s structural economic transformation.
“Discussions on graduate employability and skills mismatch should be situated within the broader context of Malaysia’s ongoing structural economic transformation.
“The shift towards a technology-driven, high-productivity and higher–value-added economy has naturally altered labour supply patterns, particularly at the early-career stage,” he told Sarawak Tribune.
He said the debate needs to account for what is driving graduate outcomes now, rather than relying on a narrow reading of conventional indicators.
“As such, graduate labour market outcomes should not be interpreted in a static manner or assessed solely through traditional indicators, without considering wage dynamics, cost-of-living pressures and the transitional nature of modern labour markets.
“In this regard, public narratives surrounding graduate mismatch require a more balanced and holistic assessment.”
He said the mismatch narrative becomes distorted when it is pinned mainly on higher education, instead of recognising the wider interaction shaping outcomes.
“It would be inaccurate to frame the issue as a failure of the higher education system alone, when in reality it reflects a complex interaction between education outcomes, labour market structures, wage-setting mechanisms, firm-level productivity and the country’s broader economic transformation agenda.
“It is therefore important to emphasise that graduate mismatch should not be shouldered solely by the Ministry of Higher Education.”
He said the issue lies in how formal entry-level wage structures are set, and whether they are keeping pace with graduates’ skills, actual productivity and prevailing living costs.
“Within this context, I am of the view that the term underemployment does not fully or accurately capture the current realities of Malaysia’s graduate labour market.
“The core challenge is not the absence of job opportunities or an oversupply of graduates, but rather the structure of formal entry-level wages, which has yet to adequately reflect graduates’ skill levels, actual productivity and prevailing living costs.”
He said the situation also needs to be read through economic geography, because labour market conditions differ widely across locations.
“Importantly, this issue must also be understood through the lens of economic geography, as labour market conditions are not spatially uniform.
“Wage levels, job availability and returns to skills differ significantly across locations, reflecting variations in industrial concentration, cost of living and regional economic maturity.”
He said low remuneration can exist even where opportunities are available, which has led some fresh graduates to be more cautious, with support mechanisms giving them room to make more deliberate early career decisions.
“In many cases, employment opportunities do exist, but are offered at relatively low remuneration levels.
“Existing social protection mechanisms such as targeted subsidies, cash assistance and cost-of-living support serve as temporary buffers that allow graduates to make more deliberate and informed career choices, rather than hastily accepting positions that do not align their long-term aspirations.”
He said wage structures are also being adjusted through phased reforms aimed at improving alignment between wages, productivity and real economic needs.
“These include periodic updates to the minimum wage in line with market conditions, the early implementation of a progressive wage policy, public sector wage adjustments, and specific attention to critical professions such as doctors through improved remuneration schemes and service incentives.
“Collectively, these measures signal a clear commitment to strengthening the alignment between wages, productivity and real economic needs.”
He noted that the more pressing work now is coordination across the wider ecosystem, spanning wage practices, training investments, labour policies and firm strategies.
“The more pressing challenge lies in cross-ecosystem coordination, involving industry wage practices and training investments, labour policies that support mobility and productivity, and economic strategies that encourage firms to move up the value chain.
“Objectively, the higher education sector has played its role effectively in supplying human capital that is broadly aligned with the needs of the economy.”
Dzul Hadzwan added that reducing the issue to underemployment risks oversimplifying a structural transition, at a time Malaysia needs a larger pool of high-quality talent as economic complexity rises.
“Labelling the current situation simply as underemployment risks oversimplifying what is fundamentally a structural and transitional issue.
“Malaysia, in fact, requires a larger pool of high-quality talent, consistent with its rising level of economic complexity – among the highest in the Asean region.”
