The right remuneration: Each day, thousands of Malaysians cross the border into Singapore for work. — The Star
BUDGET documents make for good reading if one has insomnia. Budget 2025 was no exception, when it arrived in my WhatsApp inbox in the form of a 138-page PDF file around mid-October.
Perhaps one of the most exciting announcements in Budget 2025 was the raising of the minimum wage from RM1,500 to RM1,700. What intrigued me most, however, was a clip that Human Resources Minister Steven Sim shared on his X (formerly Twitter) account in which he said, “When we say minimum wage, we don’t mean starting pay”.
The Youth Pulse column has discussed both brain drain and minimum wage in the past, but Sim has presented the issue in a refreshing and eloquent manner that I felt was worth re-examining.
The shortage of skilled local workers comprising graduates persists due to low salary offers, even as industry demand continues to grow. Those are not my words but that of the Investment, Trade, and Industry Ministry.
Data evidence prompts us to press further. According to the Statistics Department, there were 49,500 vacancies for high-skilled roles in the manufacturing sector and 22,248 vacancies in professional, scientific, and technical sectors in the second quarter of 2023. If there are approximately 300,000 students graduating from tertiary institutions in Malaysia each year, these positions would have been snapped up.
A study published in March 2024 by Khazanah Research Institute (KRI) titled “Shifting tides: Charting career progression of Malaysia’s skilled talents” provides some valuable insights. It was reported that the number of overqualified new graduates continues to increase, and they face low salary issues, with 65.6% of graduates in 2021 receiving starting salaries of less than RM2,000, with many at minimum wage level.
There are two issues here: a misinterpretation of the minimum wage and its purpose, and why existing solutions are not tackling brain drain.
Minimum wage is often mistaken, sometimes deliberately, as a baseline for entry-level or starting salaries across the board. Sim was right in emphasising that the minimum wage is not intended as a starting salary, especially for skilled professionals or graduates.
The author (far left) at an engagement session with Sim (second from right). Also present is MP for Kluang and TalentCorp chairperson Wong Shu Qi.
So to whom does the minimum wage apply? It was always meant as a safeguard to ensure all workers, particularly those in low-wage and unskilled positions, earn a fair income. That is why this increase is cause for celebration as it is instrumental in bringing those in lower income groups out of poverty.
This increase was necessary, too. Workers’ compensation as a percentage of a country’s GDP can indicate whether workers receive a significant share of the benefits from economic growth, and with Malaysia’s standing at only 33.1%, there’s significant room for improvement.
It is precisely this reason why measures like raising the minimum wage does not tackle exclusively different matters like brain drain, as the measure primarily benefits low-wage workers. As to why skilled professionals are seeking opportunities abroad, these are better answered by findings from the KRI report and the limited pathways for advancement locally.
This distinction matters especially when it comes to youth. When minimum wage is conflated with starting-level pay, the salary landscape is subjected to jeopardy, and the aspirations of workers as well as the productivity of the economy is undermined.
A strong economy demands wage diversity representative of the skill and contribution of each worker. Cheaping out on young, skilled, and deserving graduates and employees due to misinterpretation of minimum wage weakens our innovative capacity, stunts economic growth, and limits progress in technology, health, and research.
As a Malaysian studying overseas, I can attest that many students hesitate to return home for fear that their expertise will not be recognised and rewarded accordingly. The converse can be true, too, where Malaysians back home may emigrate to find better opportunities.
Beyond raising the minimum wage, we need other innovative measures. And there are strides made towards this. The Progressive Wage Policy (PWP), introduced in August, aims to support wage increases based on productivity and tackle areas of the industry where wage growth is stagnant.
However, there are still caveats to this. By encouraging government-determined wage thresholds, this model may reinforce the perception that wages across industries should align with a set minimum rather than varying by skill level and job demands. As experts at the Penang Institute rightly suggest, many of these firms could afford to pay higher wages but choose not to, undermining efforts to offer competitive salaries needed to retain skilled workers.
What is needed is a wage structure that is varied and creates wage standards based on qualification, experience, and demand in the industry to determine salaries instead of anchoring entry- level jobs to the minimum wage. Yes, it will be tough to achieve this in Malaysia’s economic diversity, but there are few alternatives that reflect the skills of the workers. Here, the need is for gradual implementation with support for compliance while the PWP programme continues to be monitored.
This would require collaboration between government bodies and private industries to establish clear salary guidelines based on qualifications, experience, and sector needs. By setting standards that go beyond the minimum wage, Malaysia could better support its high-skilled workers, aligning pay scales more closely with global counterparts, and providing incentives for graduates to remain in the country.
Academic qualification versus industry requirements is where gaps will be bridged in this effort to mitigate overqualification and enhance career trajectories. Industry partnerships can support that best. While some sectors have government incentives to support training, Budget 2025 could benefit from stronger relationships with industries to align graduate skills with market needs. Apprenticeships or on-the-job training initiatives need to be institutionalised as formal structures to create seamless career paths in high-skill areas.
For many Malaysian graduates, their concerns lie in finding positions that align with their qualifications and aspirations. This disconnect between available job roles and the skills of local graduates, particularly in sectors like technology and engineering where students invest years in specialised training only to, upon graduation, find limited avenues for career progression at home.
Young Malaysians need to feel valued, that they’re treated fairly, and encouraged to stay in the country where their expertise is recognised and adequately rewarded.
Of course, wage policies are no cure-all for the ills of Malaysia either. Affirmative upward mobility and research and innovation funding combined with broader social issues weigh upon the minds of young professionals. I don’t envy Sim’s job, but his acute recognition bodes a hope that change may finally come along.
As Malaysia looks towards the future, it is crucial that wages and broader career pathways reflect the true value of our young workforce. Retaining skilled talent is about more than paycheques; it is about creating an economy that recognises and rewards ambition, fosters innovation, and provides a future young Malaysians want to be a part of.
Student Jonathan Lee traces his writing roots to The Star’s BRATs (young journalists) programme, which he has written for since 2016. He is now a Malaysian youth advocate. The views expressed here are solely his own.
