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Improving the Quality of Higher Education: Assessing Graduation Employability
Lew Guan Xi
The recently announced Budget 2023 under Prime Minister Datuk Seri Anwar Ibrahim’s administration will allocate RM15.1 billion to the Ministry of Higher Education, which is a 5.7 per cent increase compared to the previous budget, as reported by New Straits Times. The ministry has since pledged to improve the quality of Malaysian higher education, including upgrading the basic infrastructures and adopting more digitalisation to enhance digital learning, pairing with fiscal efforts such as the deferment of National Higher Education Fund Corporation (PTPTN) loan payment and cash distribution via the e-tunai Belia Rahmah initiative.
However, another important aspect of higher education’s quality was not touched on during the tabling of Budget 2023, which is graduation employability.
In 2020, 4.4 per cent or 202,400 Malaysian university graduates are unemployed, which is a 0.5 percentage point increase from 3.9 per cent in 2019, according to Business Today. A graduate tracer study conducted by the Ministry of Higher Education itself also found that the graduation marketability of Malaysian graduates dropped from 86.2 per cent in 2019 to 84.4 per cent in 2020. In an interview with university graduates done by Utusan Malaysia and Malay Mail, participants stated that they are unable to find jobs that suit their expertise, forcing them to dive into part-time or gig jobs, which often come with low pay. As a result, they are trapped in poverty despite holding high academic qualifications.
Malaysia is still considered a labour-intensive economy, which means most of our products require manual labourers to carry out physical work. These jobs are often known as low-skilled jobs, which do not require high academic qualifications or a degree for one to join. One can join these sectors simply with an SPM slip and learn all the skills needed for operations throughout the process. While from the workers’ perspective, these jobs only grant them low pay, from the employers’ perspective, low pay means low production cost, which indicates higher profit.
Moving back to university graduates, tertiary education institutions produce high-skilled individuals, with the students being exposed to various digital skills and trends, especially in this digital era. However, with Malaysia being a labour-intensive economy, the demand for digitally skilled workers is generally low across most industries in the job market. In 2021, Malaysia produced 5.61 million university graduates, which is a 4.7 per cent increase from 5.36 million in 2020, based on the data by the Department of Statistics Malaysia. The number is expected to increase every year, given the increasing accessibility to various public and private institutions across the country. Such a continuous increase in the number of university graduates has caused an oversupply of high-skilled workers in the Malaysian job market, where employers are reluctant to hire. Consequently, some of them leave for better career prospects overseas, and those who stay remain unemployed.
The question here is, why are employers reluctant to hire high-skilled workers? Again, the answer can be traced back to production cost. It is logical for university graduates to demand higher salaries given their skills and expertise, but in a labour-intensive economy like Malaysia, cheap manual labour is the key to high profit. This is why Malaysian employers in key sectors such as plantation, manufacturing, and construction chose to hire foreign workers over Malaysian university graduates. Foreign workers demand lower salaries (which, when converted back to their countries’ currencies, become a large amount), thus, displacing Malaysian university graduates from the job market.
A common solution to this problem that can be implemented by the government is through the increment of labour costs to force employers to start adopting digital technologies, which require high-skilled workers to operate; hence, matching the demand to the supply of university graduates in the market. However, given the current economic situation in Malaysia which faces a sharp labour shortage in key sectors, now is not a good time for increasing labour cost. This is also why the government is currently planning to develop an online portal to facilitate the recruitment of foreign workers. According to Home Minister Datuk Seri Saifuddin Nasution Ismail, the portal may also adopt blockchain technology to increase transparency and monitor adherence to the labour standards set by the International Labour Organisation (ILO). All these are aimed at reducing bureaucracy and corruption within the system, which will eventually lead to lower costs of labour, further discouraging employers to adopt digitalisation.
The key question that must be answered by the government is, what to do after the labour market is stable and labour shortage is addressed? Will the government allow employers to continuously depend on foreign workers, while our Malaysian graduates bring their talents overseas? The government must strive to retain local talents here, for both sentimental and economic reasons. A digitalised economy will certainly generate more income compared to a labour-intensive economy, bringing higher living standards for all Malaysians. Hence, gradually increasing the cost of hiring foreign workers is a must after the current urgency of labour shortage is addressed.
Malaysian higher education is capable of producing human capital for the country’s development, but the current job market is not ready to accept them, given its labour-intensive nature. Thus, the government must leverage its effort in promising university graduates’ welfare, while adopting policies to tackle labour shortage as soon as possible for Malaysia to eventually progress into the realm of digitalised economy.
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