Degree Inflation in Malaysia: Is University Education Worth It?

In 2022, TikTok user @ainxang went viral after sharing her experience of working at KFC, despite being an honours graduate in chemistry (Dorall, 2022). This very year, yet another article has reported a similar situation. The case of Zuraini Zulkornian, a 25-year-old who graduated with a first-class Bachelor’s Degree in Finance with a Vice Chancellor’s award, working as a restaurant assistant for the past year (Renushara, 2024).

At first glance, this may be attributed to the mismatch of job opportunities or the lack thereof. Perhaps more importantly,this also raises an urgent question: whether pursuing a degree is still a viable path to a successful career.

What is Degree Inflation? 

Degree inflation (or credential inflation) refers to the phenomenon where the value of a degree decreases as holding a degree becomes more commonplace (Araki & Kariya, 2022). As a result, many graduates accept roles that underutilize their qualifications and skill sets (Delaney, McGuinness, & Redmond, 2019). 

Multifaceted factors are undermining this phenomenon, and here are a few key factors:

1. Credentialism: Today’s job market views qualifications as a social status rather than a true indication of knowledge and expertise. This societal expectation leads to individuals seeking qualifications instead of competencies (Tomlinson & Watermeyer, 2020). Employers also tend to use degrees as a way to filter through applications, favouring applicants with degrees even if the job doesn’t strictly need one, to cut hiring costs (CIPD, 2022). 
2. The skill gap dilemma: As technology advances, education institutions face the challenge of current education syllabuses being misaligned with the needs of the workplace (Predovic et al., 2020). Experts have shared that Malaysian students who learn through objective tests lack critical thinking skills and do not understand how to apply superficial knowledge to the real-life complexities of work (“The Future of Talent in Malaysia 2035,” 2019). 
3. Oversupply of graduates: Student enrolment in higher education has increased drastically from 46,596 in 1980 to 1.2 million in 2020 (Abdul Hamid, 2022). The rapid expansion of tertiary education in Malaysia has been driven by the government’s policy of increasing intake in public institutions, and the growth of the private education sector. However, Malaysia’s economy has failed to meet the demand for skilled employment opportunities. In the second quarter of 2024, approximately 62.9% fall into the semi-skilled category, while only 26.7% are classified as skilled positions (Kana, 2024).

What does this mean for Malaysians?

Human Resources Minister V Sivakumar shared that Malaysia’s brain drain stood at 5.5% of the population, far higher than the global average of 3.3% (The Star Online, 2023). According to the Business Times, more than half of these Malaysians employed overseas were high-skilled workers (Leng, 2024). With lower salaries back home and better career growth opportunities abroad fuelling this phenomenon, it is clear that Malaysia faces significant challenges in retaining its skilled workforce. 

Furthermore, a new trend is emerging among Malaysian youth, who are increasingly exploring alternative career paths. The Department of Statistics Malaysia (DOSM) quoted that 72.1% of youth wished to opt out of further education after obtaining a Sijil Pelajaran Malaysia (SPM) qualification (Mutalib, 2022). The majority justified this by citing the low starting salaries for fresh graduates, reasoning that the financial return does not justify the time and resources invested in obtaining a degree (Othman et al., 2023).

While Malaysia strives to become a knowledge-based economy with a strong focus on building the digital sector, the net outflow of academics presents significant challenges. Notably, only 3.5% of Malaysian firms have introduced new products in the last three years due to limited research and development efforts (MIDA, 2021). With fewer individuals interested in pursuing further education, this might further exacerbate the talent gap in Malaysia. This is especially true with STEM sectors, as there has been an alarming decline in student interest (Idris et al., 2023).

So, what is the value of a degree? 

There are many pathways to obtaining a degree, from public to private universities. Universities in Malaysia offer many study pathways to obtain a bachelor’s degree within 3 to 4 years. The table below breaks down some common pathways and their monetary cost to further discuss its relative worth. (Excluding Bachelor of Medicine and Bachelor of Surgery)

Now that we know the cost of pursuing a degree, let’s look into the return on investment – graduate salary. According to Statistica (2023), Malaysian employees with Sijil Pelajaran Malaysia (SPM) as their highest qualification earn an average of RM2,280 per month, while those with university degrees earn an average of RM5,760 per month. This can be attributed to university degree holders being able to pursue higher-skilled jobs that offer better compensation.

Assuming the salaries stated, let us analyse the cost of pursuing a bachelor’s degree. Here, we will use a cost estimate of a student pursuing a 4-year engineering degree at a local public university. 

Given an estimated cost of RM191,440, we can calculate the time it would take for a degree holder to recoup this amount through their job. 

Assuming the monthly salary of a degree holder is RM5,760 per month.

191,440÷5,760=~ 33 months

33 months ÷12=~ 3 years

While the estimated recoup time is approximately 3 years, the calculations above only take into account the cost of the degree itself, without taking into account other fees, repaying PTPTN loans, or even inflation. 

Making it worth: 

In Malaysia, degree inflation is tied to many socio-economic challenges. Addressing this multifactorial issue requires a collective effort from various parties and stakeholders. 

Since 2011, the Malaysian government has been running the Returning Expert Program (REP) to encourage Malaysian talent to return home. Although around 11,068 overseas Malaysian professionals have applied (Gimino, 2024), financial incentives, such as tax exemptions and housing support, may not be sufficient.

The European Union (EU) offers a compelling model for addressing this challenge. Rather than relying solely on individual incentives, the EU has focused on systemic improvements, particularly in building the research and development sector. Initiatives like Horizon Europe create high-quality jobs and attract skilled workers by fostering an ecosystem of innovation and opportunity (Directorate-General for Research and Innovation (European Commission), 2024).

The Malaysian government could learn from the EU by attracting foreign investment in high-tech sectors and fostering academia-industry collaboration. These measures can raise wages for skilled jobs (Bertelsmann Stiftung, 2024), making career development in Malaysia more appealing for both returning professionals and emerging youth. This approach could help safeguard the value of degrees and stem brain drain.

Educational institutions also play a pivotal role in addressing degree inflation as the degree providers. They navigate a delicate balance, fulfilling academic requirements while meeting industry demands. Ultimately, educational institutions should be bold to defy standards when there is an opportunity for innovation in the field. 

Outlook for our youth: 

Higher education’s true worth is in building lifelong learning skills. While degrees provide valuable technical skills and knowledge, there are also other paths to success. Alternatives like vocational training and entrepreneurship offer unique benefits and shouldn’t be overlooked. It’s essential for individuals to carefully consider the pros and cons of each option, choosing what best suits their goals, circumstances, and learning preferences. Above all, maintain an open mind, as every experience offers an opportunity to grow!

Written by: Neoh Yi Theng

About the Author

Yi Theng is currently studying abroad at The University of Hong Kong (HKU), majoring in science. Her interests span a wide range of topics, especially those impacting our daily lives, be they financial, social or environmental issues. She is passionate about learning and developing multidisciplinary insights and solutions. Yi Theng hopes to leverage the power of data to bring about social good in the future!

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