MALAYSIA’S low unemployment rate, currently around 2.9%, is often viewed as a sign of a strong labour market. However, this figure does not fully capture the reality faced by many graduates.
A more pressing concern is the high level of graduate underemployment, where individuals with tertiary education are employed in roles that do not match their qualifications or skill levels.
Recent data indicates nearly one-third of tertiary-educated individuals are underutilised in their current jobs.
Many are employed in lower-skilled or semi-skilled positions, despite having invested significant time and resources into higher education. While such roles may provide initial income and work experience, prolonged underemployment limits career progression, reduces earning potential and affects motivation and confidence.
From an economic perspective, this mismatch represents an inefficient use of human capital. Governments, families and students make considerable investments to support higher education.
When graduates are unable to apply their knowledge and skills effectively, the return on this investment diminishes. In the long term, this affects productivity, innovation and overall economic growth.
Several factors contribute to this issue. Job creation in high-skilled sectors has not kept pace with the increasing number of graduates while service sectors – often requiring lower skills – expand more rapidly. Additionally, many employers expect graduates to possess prior experience, placing fresh graduates at a disadvantage. As a result, many accept jobs below their qualification level as a temporary solution, which may become long-term.
Addressing graduate underemployment requires coordinated efforts. Universities must strengthen industry linkages, enhance internship programmes and focus on employability beyond job placement.
At the same time, policymakers should prioritise the development of knowledge-intensive industries, such as technology and advanced manufacturing, to better absorb skilled graduates.
Ultimately, the strength of a labour market should not be measured solely by employment rates but by how effectively it utilises the skills of its workforce.
A truly successful economy ensures alignment between education, opportunity and employment, enabling graduates to contribute meaningfully to national development.
Yogeeswari Subramaniam
Senior lecturer
Universiti Teknologi Malaysia
Source: economic-cost-of-graduate-underemployment
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