Malaysia faces graduate job mismatch as economy creates too few high-skilled jobs

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Graduate job mismatch in Malaysia

Highlights

October 2025 data shows that Malaysian graduates aged 24 and under earn a median monthly salary of RM2,031, well below the RM3,100 living wage benchmark.
An April 2026 World Bank report says the main problem is a shortage of highly productive firms and skilled jobs, even as the number of graduates rises.
The article calls for education and economic reforms to work together, focusing on more ICT, engineering and health graduates, while employers invest in practical training.

This article was translated from the original. Read the original version by our correspondent here.

Salary data and causes of skills mismatch

As reported by The Edge Malaysia, debate over graduate underemployment has become more prominent as the country continues to produce more higher education graduates while the labour market has yet to absorb them into high-value jobs. Government policies to raise the wage floor, including increasing the minimum wage from RM900 in 2013 to RM1,700 currently and targeting RM2,000 by June 2027, aim to lift incomes. But the bigger question is whether these measures address the root cause of the problem.

The article argues that wages are ultimately shaped by the market rather than determined entirely by policy. Although the living wage benchmark for government-linked investment companies and government-linked companies has been raised to RM3,400 per month, and a minimum starting salary of RM2,500 has been announced for semi-skilled workers and graduates, such measures may not resolve the issue of graduates working below their qualifications.

Data from the Department of Statistics Malaysia reported in October 2025 shows that graduates aged 24 and under earn a median monthly salary of RM2,031, well below the RM3,100 living wage benchmark previously adopted by GLICs and GLCs. However, this gap alone does not prove that employers are paying unfair wages, since the median also combines graduates from different fields, occupations, locations and levels of experience.

Salary distribution by field of study reveals significant differences. More than 85% of information and communications technology graduates earn over RM2,000, with the largest group earning between RM3,000 and RM4,000, while around 60% of education, arts and humanities graduates earn less than RM2,000. This pattern shows that demand for specific skills continues to play a major role in determining labour market returns.

The article also stresses that Malaysia's underlying problem is twofold: the economy does not create enough high-skilled, high-paying jobs, while the education system does not always develop the capabilities those jobs require. In this context, simply increasing academic qualifications is not enough if graduates do not acquire job-ready skills and employers lack sufficient productive opportunities to make use of their talent.

Education and economic reforms must go hand in hand

The article says the gradual decline in the quality of education in Malaysia is now becoming evident in rising underemployment and sluggish productivity growth. Although access to basic education is almost universal, Malaysian students' learning outcomes are said to be equivalent to just 8.9 years of schooling, despite completing 12.5 years in school. This points to weaknesses in applying knowledge to real-world situations.

At the same time, a culture that places too much emphasis on certificates and formal qualifications is also seen as contributing to the market gap. A degree certifies completion of a programme, but does not necessarily demonstrate mastery of the skills required by industry, particularly as artificial intelligence, or AI, rapidly changes job tasks and workplace requirements.

On the demand side, an April 2026 World Bank report titled Raising the Ceiling, Raising the Floor concludes that Malaysia's underemployment is primarily a demand-side problem. The country's workforce is becoming more educated, but the economy is not generating enough highly productive firms and high-skilled jobs to absorb the available talent, limiting wage growth and career advancement opportunities.

According to the analysis, Malaysian firms are growing too slowly, with a limited export footprint outside the electrical and electronics sector. A business environment that offers weak incentives for scale, competition and investment reduces companies' ability to innovate, improve productivity and create more high-paying jobs.

The article recommends that public policy focus on increasing the number of graduates in fields with clear shortages, especially core engineering, ICT, and health and welfare, while improving the quality and relevance of education in these areas. At the same time, employers also need to invest in training, practical experience and workforce development, rather than simply expecting educational institutions to produce fully job-ready workers.

The key conclusion is that education reform without economic reform will continue to leave highly capable graduates in jobs that do not make use of their potential. Conversely, economic reform without improvements in education quality will leave businesses struggling to find the talent they need, as Malaysia faces the risk of losing even more skilled workers to other countries.

In our earlier coverage of ICT and e-commerce developments in Malaysia, we highlighted the sector's contribution of RM476.8 billion, or 23.5% of GDP, in 2025, driven by growth in ICT services and manufacturing. We also underscored the strengthening trade in ICT products and how the expansion of digital activity—including e-commerce—could act as a catalyst for more high-skilled jobs in the economy.

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