By Prema Ponnudurai and Dr Joseph Malaluan Velarde
Prime Minister Datuk Seri Anwar Ibrahim’s Budget 2025 announcement of the increase of minimum wage from RM1,500 (approx. 453.13 SGD) to RM1,700 (approx. 513.54 SGD) has received mixed reactions from the different economic sectors.
The minimum wage order, effective in February 2025, has implications towards the higher education sector, whereby 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 have indicated a decline. As reported in the 2023 Sijil Pelajaran Malaysia (SPM) examinations, some 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 on a decline, 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 US (88%).
The Malaysian government’s decision to increase the minimum wage has sparked debates on the necessity of higher education. With SPM graduates are now able to earn a liveable income without tertiary qualifications, leading some to question whether pursuing a degree is still worth the investment.
However, despite the wage hike, higher education remains a crucial stepping stone for long-term financial security and career advancement.
While minimum wage jobs are quick wins toward providing immediate financial relief, degree holders experience significantly higher lifetime earnings and additional benefits.
Entry-level graduates earn between RM2,000 (approx. 604.23 SGD) and RM3,000 (approx. 906.31 SGD) per month, depending on the field, compared to SPM leavers earning RM1,700 (approx. 513.54 SGD) to RM2,000 (approx. 604.23 SGD).
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 2030 Future Skills report, there is a clear skew towards artificial intelligence, 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 of resilience, leadership, collaboration and learning to learn, are emerging as crucial capabilities in a rapidly changing world. A university environment provides for this growth, as a recent study by the University of Oxford highlights 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 the population at entry-level positions. Thus, the university environment provides youth with a nurturing and productive surrounding for developing leadership potential and pushing the boundaries of innovation, leading towards 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 to pivot their strategies in order to remain competitive and relevant towards the future workforce and industry needs to ensure graduate employment.
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