Ex-BNM Governor: Fresh Grads Should Be Earning RM7,000–RM8,000 Instead Of RM2,000–RM3,000

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Speaking to Sinar Harian, he highlighted that graduate salaries today are not commensurate with rapid economic growth and the rising cost of living.

Drawing a comparison to his own career, he said fresh graduates today typically earn between RM2,000 and RM3,000 per month, only marginally higher than his own starting pay of RM1,300 in 1984.

Adjusting for inflation, he argued that new graduates today should ideally be earning between RM7,000 and RM8,000 a month, based on an assumed annual inflation rate of 5%.

"This equates to the purchasing power of RM300 to RM400 in the 1980s. In reality, wages have eroded by at least threefold," he said.

Reflecting on his early career, Muhammad was able to buy a car six months into his first job and purchase a house after just three years of employment in the late 1980s.

He now wonders whether the next generation will enjoy the same opportunities, Sin Chew Daily quoted him as saying.

Citing the Higher Education Ministry, the Chinese daily reported that about 40% of fresh graduates in Malaysia earn less than RM2,000 in their first jobs.

He noted that Malaysia has been in a middle-income trap for many years, with issues stemming from structural issues, such as heavy reliance on low-skilled foreign workers, failure to generate high-quality jobs, and an outdated education and skills training system.

The majority of foreign workers in Malaysia are employed in the 3D (dirty, dangerous, and difficult) sectors such as plantations, fisheries, factories, construction sites, restaurants, and domestic work, reported Sinar Harian.

As of 31 December 2024, the country's total workforce stood at 16.78 million people, with 14%, or 2.37 million, being foreign workers.

"Most of the foreign workers hired over the past few decades are low-skilled and inexperienced, making their recruitment costs cheaper.

"This situation directly competes with the low-income group (B40) as their salaries do not increase," he said.

He said many nurses, for example, have been migrating to Singapore, the Middle East, Australia, and New Zealand.

According to data released by JobStreet, the average monthly salary of nurses in Malaysia is between RM2,700 and RM3,400. In contrast, nurses earn between RM11,000 and RM13,000 per month in Singapore, and nearly RM7,000 in Saudi Arabia.

The former BNM governor also noted that many Malaysians commute daily to Singapore — not to become chief executive or financial officers, but to perform manual labour — lured by significantly higher wages across the Causeway.

He warned that Malaysia is at risk of transitioning from a "talent exporter" to a "labour exporter" if it fails to restructure its economy and create more high-paying jobs.

He pointed to the example of countries like China, Taiwan, South Korea, and Japan, which were behind Malaysia in terms of per capita income during the 1960s but have since surged far ahead through decades of targeted economic transformation.

The 65-year-old former banker added that he had witnessed the resilience of the Malaysian economy and believes in the potential to change and achieve high-income nation status.

He stressed that Malaysia should not only compare itself with ASEAN countries or weak economies but should instead benchmark itself against high-performing economies.

Muhammad is a Harvard graduate and served as Managing Director of Danamodal Nasional Bhd during the 1997 Asian Financial Crisis and as BNM governor from 2016 to 2018.