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Encourage graduates to work abroad for better salaries to service student debt, Khazanah Research tells Putrajaya
By Hee En Qi / theedgemalaysia.com
16 May 2024, 12:24 pm
KUALA LUMPUR
KUALA LUMPUR (May 16): The government should encourage more graduates to work abroad for better salaries to service their student debt, as Malaysia is experiencing wage stagnation and an erosion of living standards, according to the Khazanah Research Institute (KRI).
“This reality is where relatively poorer households secure financial loans for higher education. However, employment outcomes for fresh graduates have not translated into favourable outcomes,” KRI said in a report titled “The Financialisation of Our Lives” on Thursday.
According to the research institute, almost all National Higher Education Fund Corp (PTPTN) borrowers who come from the bottom 40% (B40) category are not paying back their student loans, mainly due to bad personal financial positions. The B40 category makes up 55% of PTPTN borrowers, and 60% of the total loan amount disbursed.
KRI said fresh graduate salaries had remained almost stagnant for at least a decade, with 59.6% of fresh graduates making RM2,000 or less for their first job in 2021, showing only marginal improvement from 60.8% in 2010.
At the same time, the rate of unemployed fresh graduates within a year after graduation remained stagnant, recording a double-digit figure of 15.2% in 2021.
“Unemployment is a consequence of the economy, not the higher education system. Therefore, it is an opportunity to reconsider policy options to induce more graduates to work abroad,” it said.
Income-contingent education loans
KRI also recommended the introduction of income-contingent education loans, where repayments are initiated only after borrowers surpass a predetermined income threshold, with the repayment scale linked to their income levels.
Currently, PTPTN borrowers are obligated to repay their education loans 12 months after graduation, regardless of income levels.
“This approach overlooks the inherent diversity in borrowers' financial capabilities, thereby inadvertently penalising those who face challenges in meeting payments and under-capitalising those with the means to do so,” it said.
Furthermore, KRI prompted a policy option to recognise TVET (technical and vocational education and training) as an option for tertiary education, citing that those who lean towards vocational or technical vocations might not do so, because of the prevailing societal stigma.
“It is worth noting that TVET graduates tend to enjoy favourable employment outcomes, with a higher percentage of securing a job within a year after graduation compared to their non-TVET counterparts,” it said.
On March 15, Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi said the National TVET Policy, set to be launched in June, will involve the provision and enhancement of high-technology-based courses to prepare skilled workers in fields such as artificial intelligence, solar energy, electric vehicles, communications and hydrogen.
He said at the time that the employability rate of TVET graduates stood at 92.7%.
By Hee En Qi / theedgemalaysia.com
16 May 2024, 12:24 pm
KUALA LUMPUR
KUALA LUMPUR (May 16): The government should encourage more graduates to work abroad for better salaries to service their student debt, as Malaysia is experiencing wage stagnation and an erosion of living standards, according to the Khazanah Research Institute (KRI).
“This reality is where relatively poorer households secure financial loans for higher education. However, employment outcomes for fresh graduates have not translated into favourable outcomes,” KRI said in a report titled “The Financialisation of Our Lives” on Thursday.
According to the research institute, almost all National Higher Education Fund Corp (PTPTN) borrowers who come from the bottom 40% (B40) category are not paying back their student loans, mainly due to bad personal financial positions. The B40 category makes up 55% of PTPTN borrowers, and 60% of the total loan amount disbursed.
KRI said fresh graduate salaries had remained almost stagnant for at least a decade, with 59.6% of fresh graduates making RM2,000 or less for their first job in 2021, showing only marginal improvement from 60.8% in 2010.
At the same time, the rate of unemployed fresh graduates within a year after graduation remained stagnant, recording a double-digit figure of 15.2% in 2021.
“Unemployment is a consequence of the economy, not the higher education system. Therefore, it is an opportunity to reconsider policy options to induce more graduates to work abroad,” it said.
Income-contingent education loans
KRI also recommended the introduction of income-contingent education loans, where repayments are initiated only after borrowers surpass a predetermined income threshold, with the repayment scale linked to their income levels.
Currently, PTPTN borrowers are obligated to repay their education loans 12 months after graduation, regardless of income levels.
“This approach overlooks the inherent diversity in borrowers' financial capabilities, thereby inadvertently penalising those who face challenges in meeting payments and under-capitalising those with the means to do so,” it said.
Furthermore, KRI prompted a policy option to recognise TVET (technical and vocational education and training) as an option for tertiary education, citing that those who lean towards vocational or technical vocations might not do so, because of the prevailing societal stigma.
“It is worth noting that TVET graduates tend to enjoy favourable employment outcomes, with a higher percentage of securing a job within a year after graduation compared to their non-TVET counterparts,” it said.
On March 15, Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi said the National TVET Policy, set to be launched in June, will involve the provision and enhancement of high-technology-based courses to prepare skilled workers in fields such as artificial intelligence, solar energy, electric vehicles, communications and hydrogen.
He said at the time that the employability rate of TVET graduates stood at 92.7%.
