'RM56 annual pay hike in 30 years' - study raises alarm over stagnant wages

A recent study on the average annual salary increase over the past three decades has revealed the severity of Malaysia’s stagnant income problem.

According to Utusan Malaysia, a study by the Khazanah Research Institute (KRI) found an average annual salary increase of only RM56 in the past 30 years.

The study found that 60 percent of bachelor’s degree holders in 2010 earned salaries below RM2,000, and 11 years later, the situation remains virtually unchanged with 59.6 percent of graduates still earning below RM2,000.

KRI senior researcher Mohd Amirul Rafiq Abu Rahim reportedly said the numbers show that the issue of low salaries in the country remains unresolved.

“This contributes to financial difficulties among the youth, compounded by insufficient savings and the rising cost of living,” he said, citing additional financial strains from the high cost of education.

“For instance, a graduate with a starting salary of RM2,000 per month has to allocate around RM350 monthly to repay student loans. This can be a significant burden, particularly for graduates from low-income families.

“Based on research, approximately 84 percent of National Higher Education Fund Corporation (PTPTN) borrowers come from households earning below RM5,000,” said Amirul during a webinar yesterday.

It was previously reported that as of Dec 31, 2021, RM32.29 billion in PTPTN loans remained unpaid by 2,716,110 borrowers.

According to Utusan Malaysia, Amirul said student loan debt is now the second-highest financial commitment among youths, behind vehicle loans.

“A majority of young people under 30 are burdened by various types of loans, including student loans, with 28 percent of them having education-related debts. The primary reasons for their financial strain include rising living costs and low wages,” he was quoted as saying.

Among KRI’s suggestions to address the issue include more flexible loan repayment methods, such as Income-Contingent Loans (ICL), where borrowers repay their loans based on their income level.

“KRI also recommends expanding the National Education Savings Scheme (SSPN) to encourage families to save early for their children’s education. Moreover, vocational and technical education (TVET) should be promoted as a cost-effective alternative that equips graduates with marketable skills,” he added.

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