How the pay squeeze made your pricey university degree (kind of) worthless

Part-time Uber driver John Zachariah has a degree in IT engineering and never thought he would have to work two jobs. ― Picture by Choo Choy MayKUALA LUMPUR, Aug 25 ― Despite his Bachelor’s degree in IT engineering, John Zachariah works two jobs and six days a week: he is a telecommunications engineer by day and an Uber driver by night.

He believes his qualification does not necessarily guarantee him an adequate income, so he works two jobs and long hours in order to own a car and service the loan, something previous generation degree holders could have done with just one job as recent as 10 years ago.

After four years into his job, John makes roughly RM4,000 a month. He said his salary increased gradually through the years, but is still far from enough to pay for the monthly installments of a car he took over from his sister, who has since left Malaysia for Singapore. For a better-paying job.

“I didn't think I would have to work two jobs. Honestly, then (studying) I thought I could earn enough (with my qualification),” John told Malay Mail Online, adding that the sharp rise in cost of living in the city forced him to confront the harsh reality that his full-time earnings alone was not enough to pay the bills.

For the well-groomed and articulate 26-year-old, ride-sharing services company Uber is heaven-sent. Its flexible hours give people like John the time to clock in after working hours.

He says he drives around three to four hours a day, which adds up to about 14 hours of work daily. He also works the weekends, which earns him around RM500 a month… just enough to pay for his car.

But John isn't complaining. To him, and many other graduates around his age, what they earn is based on market rate, although he wasn't aware that the rate has been relatively stagnant for the past 15 years.

Being a degree holder today may not hold as much value as it did as recent as 15 years ago. Worst, degrees often acquired at  a hefty cost thanks to skyrocketing education fees are no longer the magic ticket to a sustainable income, nevermind a lucrative one.

One of the primary factors contributing to the devaluation of degrees today is wage stagnation. Millennial degree holders today are still being paid around the same starting salary as their older counterparts 10 years ago.

The city of Kuala Lumpur is an expensive place to live in... and many graduates find that their degrees no longer guarantee them high-paying jobs. ― File picAdjusted to inflation, which has more than tripled in the past decade, today's pay for degree holders in terms of value is equivalent to the earnings of lesser-skilled workers 10 years ago.

“Ten years ago, a starting salary for a fresh graduate was about RM1,800. Now it's about RM2,000 to RM2,200. So the increase is really slow compared to the inflation rate,” Sharon Soo, director of Savant Search Malaysia, a headhunting firm employed by corporations like the Berjaya Group and multinational Emerson Electric, told Malay Mail Online.

Cost vs earnings

For educated millennials, often stereotyped as the “bratty” and “unrealistic” generation, working two jobs has become quite the norm in the country's industrialised states like Penang and Selangor where cost of living is definitely higher than say, in smaller towns.

And Uber, and its competitor Grab, have become a popular second job option for educated millennials looking to supplement their low full-time earnings. And the numbers are growing by the day, Soo said.

“It's hard for them to sustain and a lot of them are actually getting financial aid from their parents… without parents it can be quite difficult. A lot of my candidates are doing Uber and with Uber you can make quite a bit if you're hardworking.”

But working two jobs can be taxing in the long run. And millennials are beginning to ask if investing so much in their education, which can go up to half a million ringgit for an overseas degree, is worth it since most end up having to work low-paying jobs, and drive Uber on the side just so they can pay their mortgages or car loans.

“Realistically, I don't think I can earn enough to buy a house in 10 years with my pay… and with the situation in the market, I don't think our salaries are going to get any better,” Gerald Wan Tom, 28, who works in a hotel staff and has a degree in hospitality, told Malay Mail Online.

Gerald earns RM4,500 a month after five years into his job. Half of his salary goes to rent (RM1,000 for an apartment in Damansara Perdana) and servicing his car loan (RM700), which leaves him with only around RM2,000 to spend.

Driving Uber is a godsend to many millennials who find their day jobs don't pay enough these days. ― File picBuying a house, a dream he calls it, is out of the question with what he makes so he drives for Uber daily after work and the weekend too. That's seven days of work a week around the clock.

“My total education cost was about RM35,000. With expenses I think it went up to RM40,000… when I was studying of course, I expected to make enough with my qualification,” said Gerald, who graduated from Taylor’s College, one of the many private colleges here.

In Malaysia, most parents believe a degree, especially those acquired from Western countries, would give their children the edge in an increasingly competitive labour market.

This is understandable since colleges spend heftily to market their services to parents as insurance for their children's future, which explains why some parents go to great lengths, and sometimes even beyond their means, to secure their children university degrees.

Jason Chi, 31, is one such example. His parents spent RM500,000 to send him to Switzerland to study hospitality. But like Gerald and John, he too drives for Uber after his working hours as a manager in a factory in Ipoh, where the cost of living is still relatively low compared to that in Kuala Lumpur or Johor Baru.

“I do it out of necessity. It helps me pay for the car (a Perodua MyVi) and give me some extra cash to spend. With the qualification I got of course I didn't expect to fall under the category of urban poor. I mean I live above the poverty line but that doesn't mean I'm doing well. I'm struggling to even have a medium (income) life,” Chi told Malay Mail Online.

Global problem

Wage depression among millennials is not unique to Malaysia. In developed countries like the United States, today’s 30-year-olds make about as much as a 30-year-old would have in 1984, and a dollar less than a 30-year-old in 2004, a study by the Centre for American Progress showed. And this is despite the fact that most millennials there, just like their counterparts in Malaysia, have degrees.

Cost of living continues to rise, and when you live in the city working two jobs to make ends meet is not unusual. ― File picBank Negara Malaysia in its 2015 income report showed that for the bottom 20 per cent of urban poor ― defined as households earning RM2,000 and below ― daily expenditure outpaces their income growth.

A straw poll conducted by Malay Mail Online found that the majority of millennials with degrees interviewed earn around RM3,000, just RM1,000 above BNM's unofficial definition of urban poor. Malaysia has yet to develop a standardised gauge to define urban poor.

For a top Malaysian student like Priya (a pseudonym), who graduated with a degree in information technology with a near-perfect CGPA of 3.8, the problem of wage stagnation coupled with rapidly shrinking buying power caused by a weak ringgit means a RM5,000 monthly salary ― once considered a high pay ― is no longer enough.

She is planning to get married soon but she's worried that she may not make enough to sustain a family. As an additional income, she has turned her passion of cake decorating into a part-time job.

A good month means she can make RM2,000, a decent amount, and RM1,000 on a bad month. But all that has changed since Malaysia's economy tumbled.

“The economic downturn started last year and since then I don't get many orders. Even if I do get, it’s just simple orders. It's not great but I'm still surviving,” Priya told Malay Mail Online.

Priya said she and her fiance are planning to buy a house, only if they can afford it.

With Malaysian house prices close to doubled in the past 10 years, according to BNM data, most millennials have resigned to the fact that they may have to rent for life.

In a special report on wage stagnation published by Malay Mail Online recently, official data indicates that wages in Malaysia have grown at a 90 per cent slower rate than productivity. For major states like Kuala Lumpur and Penang, wage growth the past two years is in the negative when adjusted to inflation.

Soo said businesses have now exploited the slowdown to keep starting salaries for degree holders low since hiring opportunities have lessened: “Now the rate is RM2,200. Before it was RM2,500 but they have lowered it because they know graduates have no choice but to take it.”

Critics have long called for the government to address the wage problem. Some say Malaysia needs to invest more in education and human capital to move away from a commodity and export oriented economy, to an innovative driven one. But an immediate solution would be to help keep costs low for urban dwellers, a view shared by many millennials.

- malaymail