Johari Ghani: Some firms still pay TVET graduates like foreign workers despite minimum wage increase

Johari Ghani said some Malaysian companies are treating TVET graduates like foreign workers when setting their pay. This matters because TVET graduates are trained for technical and industrial work, yet low wages can make manufacturing careers less attractive to Malaysians.

The reports describe firms offering some TVET graduates RM1,700. Johari also highlighted companies that make hundreds of millions of ringgit but still offer wages at that level. The criticism focuses on employer pay practices, not on the graduates’ lack of training.

The government is linking this wage issue to a wider push for local hiring. Malaysia’s manufacturing sector is described as critically dependent on foreign labour. New manufacturing licences may be rejected when proposed businesses rely heavily on foreign workers, putting pressure on firms to improve pay and attract local talent.

The reported offer is RM1,700 per month. That figure matches Malaysia’s increased minimum wage, so it represents the legal wage floor rather than a premium for technical training. Paying trained workers only at that level is the concern raised in the reports.

Johari Ghani said some firms make hundreds of millions of ringgit but still offer RM1,700 wages. The example shows how company earnings do not necessarily translate into higher starting pay for skilled local workers. It also suggests that employers may be using the minimum wage as a ceiling for some roles.

The reports present this as part of Malaysia’s wider labour problem. If firms need more Malaysians in manufacturing, they may have to offer better wages and career prospects. Otherwise, local workers may remain reluctant to enter or stay in these jobs.

TVET stands for technical and vocational education and training. It prepares people for specific occupations through practical learning, technical instruction, and workplace-related training. This matters because manufacturing needs workers who can operate, maintain, and improve production systems.

TVET graduates may bring skills in machine operation, electrical work, welding, fabrication, mechanics, automation, quality control, or industrial maintenance. The exact skills depend on the course, but the common feature is job-ready technical ability. These workers can support production more directly than workers without relevant training.

The source highlights TVET graduates because Malaysia wants companies to prioritise local workers. If firms pay trained Malaysians like foreign workers, the value of technical training may be undermined. Better pay and clearer advancement could help manufacturing attract the skilled local workforce it needs.

A minimum wage is a legally required pay floor. Employers generally cannot pay covered workers less than that amount. It is intended to protect workers from extremely low wages, although it does not guarantee that every job will pay more.

In the reports, Malaysia’s increased minimum wage is discussed alongside RM1,700 offers to TVET graduates. Johari Ghani’s criticism is that some employers appear to stop at the legal floor, even when workers have technical training and the firms themselves earn hundreds of millions.

The increase therefore changed the minimum amount employers should pay, but it did not automatically create higher skilled-worker salaries. The government’s response connects wages with labour policy. Companies seeking new manufacturing licences may face rejection if their plans depend heavily on foreign workers instead of making local employment more attractive.

A manufacturing licence signals that the government has approved a company’s proposed industrial activity. Rejecting an application can prevent a new project from proceeding under the proposed model. The government’s stated concern is reliance on large numbers of foreign workers rather than building a stronger local workforce.

The reports say new licence applications may be blocked when industries continue relying on foreign workers. This creates a direct mechanism: a company’s labour plan becomes part of the licensing decision. Firms may need to show that they can recruit and retain Malaysians, rather than designing operations around imported labour.

The policy comes as foreign-worker dependence in manufacturing reaches a critical stage. It also follows criticism that some profitable companies offer TVET graduates only RM1,700. The likely direction is tighter scrutiny of labour models, stronger pressure for local hiring, and greater attention to wages and working conditions.

The reports do not provide a precise percentage or headcount for foreign workers in Malaysia’s manufacturing sector. They do, however, describe foreign-labour dependency as having reached a critical stage. That wording indicates a major structural reliance, not a minor staffing issue.

Companies commonly turn to foreign workers when they cannot recruit enough local employees for demanding, repetitive, or lower-paid jobs. Foreign labour can help factories maintain production when local workers are unwilling or unavailable. In this case, the concern is that firms may use foreign recruitment instead of improving wages and job quality for Malaysians.

The government is responding through licensing pressure. Proposed manufacturing projects that depend heavily on foreign labour may be rejected, while companies are told to prioritise local workers. The reports therefore point toward a shift from easy labour substitution to stronger incentives for better pay, training, and productivity.

Workers’ skills can raise wages because specialised abilities are harder to replace. Productivity matters because employers can afford higher pay when a worker produces more value, reduces errors, or operates costly equipment effectively. Education and training may therefore improve earning potential, but they do not guarantee a high wage.

Supply and demand also shape pay. When many workers can fill similar jobs, employers have less pressure to raise wages. When qualified workers are scarce, companies compete more strongly for them. Wages can rise until recruitment becomes easier or employers change production methods. Legal wage floors can also prevent pay from falling below a set level.

The reports raise this issue through TVET graduates and manufacturing labour. Trained workers may be productive, yet some firms reportedly offer only RM1,700. That suggests employer demand, labour supply, bargaining power, and the minimum wage can keep actual pay near the legal floor.