KUALA LUMPUR - Nearly two million Malaysian graduates are working in jobs below their qualification level, highlighting a deeper issue in the country's higher education and labour market landscape than graduate unemployment.

Economist and former university provost Geoffrey Williams said underemployment, rather than unemployment, has become the key challenge facing graduates.

He said many graduates leave university burdened with debt and are forced to accept whatever employment is available, regardless of whether it matches their qualifications.

“Unemployment is low, but underemployment is high,” he said to The Sun.

Williams described underemployment as a more meaningful indicator of higher education outcomes than graduate unemployment figures.

According to data from the Department of Statistics Malaysia, 1.96 million tertiary-educated Malaysians were in skill-related underemployment during the third quarter of last year.

The figure represented 35.5 per cent of employed diploma and degree holders.

By comparison, graduate unemployment stood at 3.2 per cent in 2024.

Williams argued that graduate employability should not be used as a primary measure of university success.

He said universities cannot be held responsible if the economy fails to generate enough graduate-level positions.

Williams also rejected the view that universities should function mainly as workforce training institutions.

He said higher education institutions are designed to provide academic learning rather than direct job training.

He noted that many academics have limited industry experience and may not always be familiar with employers’ evolving expectations.

According to Williams, traditional employability indicators no longer provide a complete picture of graduate outcomes because they do not reveal whether graduates secure jobs that require their qualifications.

He said a significant mismatch exists between university preparation and labour market realities.

Williams pointed to Higher Education Ministry tracer studies showing that around 90 per cent of graduates enter employment while only 10 per cent become entrepreneurs.

He said the ratio was increasingly misaligned with a rapidly changing economy shaped by artificial intelligence, gig work and micro-enterprises.

Williams argued that universities should adapt by preparing students for more flexible and informal employment models.

He added that leading global universities were already moving in this direction.

At the same time, he said the Malaysian Qualifications Agency (MQA) remains essential in maintaining academic standards across the higher education sector.

Without its oversight, he warned, the quality of higher education could deteriorate.

Earlier this month, MQA chief executive Prof Datuk Dr Mohammad Shatar Sabran rejected claims that declining academic standards were responsible for graduate employment challenges.

He said Malaysian higher education continued to meet international benchmarks.

He also stressed that academic excellence alone was no longer sufficient in a competitive labour market.

Graduates, he said, must acquire additional skills and competencies to improve their employability.