Cubicles or corner offices? Effects of academic performance on university graduates’ employment likelihood and salary

Recent batches of freshly minted university graduates in Malaysia have spared no theatrics in making known their thoughts on what their starting salaries should be. Lamenting on escalating living costs, the graduates are asking for seemingly unrealistically high salaries, at least from the employers’ perspectives. To put into a broader perspective of what Malaysian fresh graduates are demanding as compared to their peers worldwide, new graduates in the U.K. are demanding a starting salary of USD1900, and more than three-quarters of university graduates in Spain expect a USD2000 starting pay. A key finding from the Malaysian Ministry of Education Graduate Tracer Study in 2015 reveals that 54% of the approximately 270,000 graduates with Bachelor’s and Diploma degrees had a starting salary of less than RM2000.

Compounding the issue of new graduates’ starting salary is the issue of graduate unemployment. Before the graduates could even start negotiating their salaries, they would have to overcome the first hurdle, i.e. to secure employment. Based on a report by the Central Bank of Malaysia, the youth unemployment rate in Malaysia was 10.7% in 2015, which was more than three times higher than the national unemployment rate of 3.1%. In Malaysia, youths are defined as those between the age of 15 and 24; university graduates constitute part of the youths. Even more alarming is the fact that, at 23%, university graduates made up almost a quarter of the total number of unemployed youths in 2015. The unemployment rate for youths with tertiary education stood at 15.3%, compared to a relatively lower 9.8% for youths with non-tertiary education.

We need to understand the institutional setting in Malaysia in order to put into proper context the graduates’ concerns with salaries and employment likelihood. Unlike university graduates in western countries where they would usually go for their gap-year experience upon graduation, Malaysian graduates would be seeking employment. This phenomenon stems from a deeply rooted culture of parental and peer pressure in securing not only a job but ideally one that comes along with good pay and prestige. There is also the ingrained cultural Asian juggernaut of places high value on excellent academic achievement. To nudge fresh graduates against leaping straight onto the job market bandwagon, the Malaysian Ministry of Education has recently announced its Gap-Year program with the first cohort of graduates taking up the program in September 2017.