Sunday August 2, 2015
08:41 AM GMT+8

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AUGUST 2 — It is the time of the year where graduation ceremonies are held across UK universities for final year undergraduates. Of course, graduation is an important occasion worth celebrating, a sense of achievement for every student successfully completing their educational curriculums.

However, it is also the time where graduates who failed to secure a job statistically becomes officially unemployed.

During this time, I had the opportunity to have short discussions with several graduates, contemplating life after graduation. In most cases, these Malaysian fresh graduates do not have much choice but to return home to Malaysia for employment as job placements in the UK are extremely competitive and limited for foreign students.

Hence, the biggest implication of returning back to Malaysia for work is to settle for a lower pay, higher inflation, and a reduced sense of security.

Malaysians in general have experienced a steady rise in cost of living in the last decade. However, salaries and income in almost every job sector remain more or less stagnant. While it is acknowledged that British fresh graduates are too facing similar problems in terms of a rising cost of living and slower pay rise, the situation in Malaysia is much worse and worrying. It is because of this factor alone, the working class at present day are now struggling more than ever to make ends meet.

From the discussion mentioned earlier, it came to attention that the average starting salary for fresh graduates fall within the RM2,000-RM3,000 bracket. For an individual living in large urban agglomerations such as Kuala Lumpur, this salary bracket is clearly insufficient and would mean that fresh graduates still have to rely on the support of their parents well into the start of their working career.

Firstly, the poor public transportation systems in Malaysia mean that owning a motorised vehicle is now seen as a necessity rather than a luxury in order for an individual to travel around places efficiently. As a result, a proportion of the initial salary has to go to the finance of this personal vehicle in terms of monthly repayments to the bank, further subtracting an already deficient salary.

Not only that, the low income and rising property prices in urban areas today will hinder the ability for fresh graduates to own a home. Despite hours and years of hard work, the younger generation today will have no choice but to rent a place, or continue living with their parents if they are lucky enough that the job offered is close to home.

Taking a simple scenario of a fresh graduate with a starting salary of RM2,500 per month, he or she will have a net income of around RM2,200 per month after the initial 11 per cent reduction to the EPF (Employees Provident Fund).

Next, assume that monthly repayments for purchasing a motorised vehicle and the cost of rent each costs RM600 per month, this will leave that individual only around RM1,000 of disposable income per month. Making matters worse, the less well-off locals with PTPTN education loan repayments after employment will again find this disposable income further reduced.

When compared to an Indonesian maid with no qualifications working in our country, the calculations above would disgracefully show that fresh graduates today have a lower amount of disposable income.

This can be explained as food and accommodation are normally provided to maids together with a monthly salary of RM1,100, higher than a university graduate after the reduction of various expenditures.

General solutions

Despite a six per cent economic growth for Malaysia in the year 2014, this progress does not seem to trickle down to the lower end of society. As described earlier, fresh graduates are going through tough times today. Therefore one might ask what are the potential solutions that can be implemented to resolve this growing problem?

One of the main reason of salaries remain stagnant in the past decade is due to the massive influx of low skilled foreign workers. At present day, the number of legal foreign workers is recorded to be around 2.1 million, which is shockingly more than the local ethnic Indian population in Malaysia.

Although one might argue that most foreign workers are unskilled, it will still pose an indirect impact on the income of skilled jobs. Explaining this point further, when foreign workers that are willing to work for low pay can be hired easily, it does not provide the right conditions for pay in this sector to rise. If the number of foreign workers entering Malaysia is carefully controlled, salaries of unskilled jobs will then start to rise.

However, in order for this solution to work, the attitude of local workers must too be corrected in terms of productivity, work ethics, as well as the mentality of taking up tough jobs. Since hiring foreign workers incur additional costs too such as agent and medical fees, I am sure employers will be willing to employ

local workers with a higher paycheck if the following changes as mentioned above can be achieved.

Thus, this will then gradually create a domino effect where the salary of skilled workers too will be increased to make up for the wage differentials.

Next, another long term solution is simply to improve the public transportation system, both inter and intra city connectivity in Malaysia. Looking at developed nations with good transportation networks, the use of public transportation can sometimes be more convenient when compared to driving.

Consequently, this will eliminate the need for fresh graduates to purchase a personal vehicle, which then increases their disposable income as monthly repayments of car loans to the bank are removed.

Moving on, several policy based instruments can also be adopted by the federal government to resolve the problem of rising living costs. These policy based instruments include scrapping the regressive GST system and replacing it with CGT (Capital Gains Tax) as proposed by the opposition, introducing and defining the boundaries for the national living wage, and finally building more affordable housing which subsequently increases housing supply to prevent prices from skyrocketing.

A diminishing dream

During the time when all of us were still kids, our parents would normally encourage us to study hard with the aim to achieve a university degree later in life. The promise and opportunity to live a better quality of life in the future as a result of studying hard would then follow.

Parents in general also used to have the expectation of their children in providing them with some living allowance after being employed. Based on the current trend and trajectory, however, these ideals can now only be a distant dream. With such a modest amount of disposable income left for fresh graduates, they will without doubt struggle to even support themselves, let alone providing allowance to their parents.

This is the time where the younger generation are encouraged to start dreaming of what they want to achieve in life, then work hard in attempt to make this dream a reality. By implementing a series of misjudged and regressive policies, the government is simply robbing these dreams away from the younger generation, hindering the chances of this group of youths to be successful later in life.

I personally believe that any individual who works hard should be entitled for the right to own a shelter and live a good quality lifestyle. However, looking at the conditions today, this does not seem to be the case. It is also expected that things will get worse before it can get better, a bleak future lies ahead. Dear fresh graduates, welcome to the real world.

* Roger Teoh, a member of the Democratic Action Party, recently completed his undergraduate studies in civil engineering at University of Manchester. Yee Leng Tan is a fresh accounting and finance graduate of University of Manchester.

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.

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