KUALA LUMPUR: A proposed mandatory minimum starting salary for graduates should reflect job responsibilities, skills and productivity, while balancing higher wages against employers' ability to sustain recruitment, economists said.
The Human Resources Ministry will introduce guidelines on starting salaries for graduates and semi-skilled workers by June 2027, following the government's announcement of a proposed RM2,500 minimum starting salary under Budget 2027.
Its minister, Datuk Seri R. Ramanan, said the guidelines would provide employers and workers with a reference for basic starting salaries based on occupations, educational qualifications and skills.
Universiti Teknologi Mara Faculty of Business and Management senior lecturer Dr Mohamad Idham Md Razak said clear eligibility criteria were essential to improve graduate wages without reducing employment opportunities.
He said the government should consider employers' financial capacity, particularly among small and medium enterprises (SMEs), before making the proposed salary requirements compulsory.
"Some employers, particularly SMEs, may become more cautious about hiring fresh graduates if the mandatory salary exceeds what they can justify based on current productivity," he told the New Straits Times.
Businesses might respond by reducing recruitment, prioritising experienced candidates or automating certain tasks, he said.
Idham called for phased implementation or targeted assistance for businesses struggling to meet the proposed requirements. He said wage reforms should also be supported by productivity improvements, professional training and stronger collaboration between industries and educational institutions.
While a salary floor could improve graduates' purchasing power amid rising living costs, he cautioned that higher wages alone would not resolve graduate underemployment.
"The ultimate measure of success is not simply whether graduates receive higher wages, but whether they gain better employment opportunities without being priced out of the labour market," he said.
Putra Business School economic analyst Associate Professor Ida Md Yasin said a minimum starting salary of RM2,500 would provide welcome financial relief for fresh graduates and could serve as a benchmark.
However, employers seeking workers with specialised knowledge and skills might need to offer higher salaries.
"Employers are also competing to attract good workers. If a job requires specialised skills or knowledge, RM2,500 may be too low, and companies may be willing to pay more," she said.
Ida said that higher labour costs could affect some SMEs and potentially lead to higher prices for goods and services.
She cautioned against assuming all SMEs would struggle to meet the proposed salary floor, as their financial capacity varied according to business performance and profit margins.
"Some SMEs have good profit margins and can afford to pay RM2,500 or even more to fresh graduates. It depends on the nature of their business and the type of work involved," she said.
Ida said the government should consider differences across industries and job requirements before making the guidelines mandatory.
She said salaries should reflect the knowledge and skills required for each position, particularly as routine and repetitive tasks could increasingly be performed through mechanisation or automation.
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