By Prema Ponnudurai, Director, Education For All Impact Lab, Taylor’s University & Dr Joseph Malaluan Velard, Deputy Director of the Education For All Impact Lab, Taylor’s University.
Prime Minister Datuk Seri Anwar Ibrahim’s Budget 2025 announcement of the increase in minimum wage from RM1,500 to RM1,700 has received mixed reactions from different economic sectors. The Minimum Wage Order, effective in February 2025, has implications for the higher education sector, where the new minimum wage and salaries of fresh graduates will be further narrowed.
Education has long been viewed as a gateway to career success, but recent trends in Malaysia indicate a decline. As reported in the 2023 Sijil Pelajaran Malaysia (SPM) examinations, 10,160 students (2.6% of registered candidates) did not sit for the exam. Additionally, statistics indicate that Malaysia’s university enrolment rate has been declining, with only 42.57% of eligible students enrolled in tertiary education—significantly below the global average of 51.98% in 2020. This figure is also much lower compared to countries like Singapore (93%) and the United States (88%).
The Malaysian government’s decision to increase the minimum wage has sparked debates on the necessity of higher education. With SPM graduates now able to earn a livable income without tertiary qualifications, some question whether pursuing a degree is still worth the investment. However, despite the wage hike, higher education remains a crucial steppingstone for long-term financial security and career advancement.
While minimum-wage jobs provide immediate financial relief, degree holders experience significantly higher lifetime earnings and additional benefits. Entry-level graduates earn between RM2,000 and RM3,000 per month, depending on the field, compared to SPM leavers earning RM1,700 to RM2,000. Over time, graduates benefit from salary increments and career progression, whereas minimum-wage workers often face wage and professional development stagnation.
Based on the World Economic Forum (WEF) 2030 Future Skills report, there is a clear shift towards artificial intelligence (AI), big data, and digital literacy. Hence, minimum-wage job opportunities are vulnerable to automation and economic downturns, leaving unskilled workers at greater risk of job displacement in the long run.
Human skills development—such as resilience, leadership, collaboration, and lifelong learning—is emerging as a crucial capability in a rapidly changing world. A university environment fosters this growth, as highlighted in a recent study by the University of Oxford, which states that self-formation empowers students to take greater agency over their learning, enhancing their social mobility and ultimately improving their professional prospects and overall quality of life. These elements for growth are limited in the human capital development of a country with a high proportion of entry-level workers. Thus, the university environment provides youth with a nurturing and productive space for developing leadership potential and pushing the boundaries of innovation, aligning with the national agenda of a knowledge economy.
In a time when societies are chasing paper qualifications, it is imperative for higher educational institutions to reflect on these statistics and pivot their strategies to remain competitive and relevant to future workforce and industry needs, ensuring graduate employment.
References:
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2023 SPM Absentee Rate Drops by 1.2%, Says Fadhlina – Scoop.my
https://www.scoop.my/news/211420/2023-spm-absentee-rate-drops-by-1-2-says-fadhlina/ -
Malaysian Education Quagmire: Destruction of Current and Future Human Capital – Sin Chew Daily
https://www.sinchew.com.my/20230904/malaysian-education-quagmire-destruction-of-current-and-future-human-capital/ -
Self-Formation in Higher Education: Agency, Social Mobility, and Professional Prospects – Taylor & Francis Online
https://www.tandfonline.com/doi/full/10.1080/03075079.2023.2252826
