Low starting pay for grads the result of old wage system

The Malaysian Employers' Federation says revamping the existing pay system which results in graduates receiving low starting salaries will not be easy. – The Malaysian Insider file pic, March 14, 2016.Mohd Daniel holds a Bachelor's degree in Aquatic Resource Science and Management and earns RM1,500 as a technical assistant in an environmental engineering firm.

He doesn't mind starting from the bottom, he says, as he knows he lacks experience.

The 23-year-old who studied at a public university said he couldn’t afford to be choosy even though his earnings did not help him cope with the increasing cost of living.

"It is not related to my field of study, but this is the only job I can get now. I cannot stay unemployed as I need to help my family and settle my loans," he told The Malaysian Insider.

He added that he was also willing to work dirty, difficult and dangerous jobs or those dubbed "3D" related to his field of study – he once applied to be a shrimp hatchery attendant but was turned down as he was considered overqualified.

"They offered RM1,200 for school leavers and didn’t want to hire me even though I was willing to work with that salary,” he said.

The reason young graduates have had to contend with low starting salaries is based on the "seniority-based pay system" used in Malaysia, said the Malaysian Employers' Federation (MEF).

"In Malaysia's context, we don’t really have rates for jobs, which is normally practised in some other developed countries where they don’t look into the length of the service to determine wage movement," its executive director Datuk Shamsuddin Bardan said.

Employers tend to feel that when they hire someone new, they are taking a risk as the employee who could turn out to be either an asset or a liability, he added.

Shamsuddin said there was a lot of pressure from many quarters over Malaysia's stagnant wages but he added that people needed to understand the seniority system used instead of the rate system for jobs.

He said the use of the seniority-based system in Malaysia was due to the adoption of the early British system of wage payment.

"Even this was adopted by the public service, the scale for an employee from the starting pay to reach the maximum can even be up to 25 years, so basically increment is given every year not because of the performance or things like that but to reward the employees for staying with the company.

"But as employers, we have introduced certain mechanisms to encourage performance and productivity.

"The factor of annual increment is no longer just because of employees staying with the company, but is also linked to the performance of employees and also the company."

However, the United Kingdom has moved away with the seniority-based system, although countries like Japan still adopt the system.

He added that it would be hard to change the salary system in Malaysia, where older employees might feel that their skills and experience are not recognised by the company.

"We are stuck with the old system, to revamp a pay system is not going to be easy."

As such, there is little movement in the growth of starting wages for graduates. The irony, says graduate Arif Luqman Shah Bani, is that employers also demand work experience.

"They are demanding for a high working experience from fresh graduates, they advertise it as entry level job but at the same time asking for three years of working experience, it's illogical," said Arif Luqman, who graduated with a Bachelor's degree in Resouce Biotechnology three months ago. He currently works part-time as an assistant restaurant manager at Kenny Rogers Roasters in Taiping.

"In my opinion, starting salary for biotech graduates should be between RM1,80 and RM2,000."

But employers usually gave RM1,500 to fresh graduates, he said, based on the offers he had received after sending out more than 150 job applications via JobStreet as well as walk-in job applications.

Another fresh graduate, Hakimi, who worked as a field assistant for a marine conservation programme at World Wildlife Fund (WWF), said his current starting salary for fresh graduates did not match the rising cost of living.

"I used to earn RM2,800 when I worked at a bank in Bangsar right after I graduated but it was barely enough for me to cover expenses like accommodation, utility bills and travelling.

"The basic pay that fresh graduates receive is quite low compared to the cost that we have spend to study," he said.

Although his current salary is RM1,000 less than at his previous job, he said it was enough as he lived and worked in Terengganu, where living costs were lower.

MEF's Shamsuddin said a study the group did last year found that the average starting salary for a basic degree holder without prior working experience was RM2,234 compared with RM2,202 in 2014 and RM2,560 for one with an honours degree in 2015, compared with RM2,559 the previous year.

For diploma holders, the average starting pay was RM1,621 in 2015, a slight increase from RM1,609 in 2014.

While a Master’s degree holder could start with RM3,146 for last year, from the previous RM3,140 in 2014, Shamsuddin these rates generally cut across all sectors. – March 14, 2016.