Malaysia is experiencing a growing disconnect between the qualifications of its graduates and the availability of suitable employment, with a significant portion of the workforce considered underemployed. According to applied economist Dr. Mikhail Rosli of Khazana Research Institute, 32.2% of the labor force—approximately 1.6 million individuals—are underemployed, including 66% of graduates aged 24 and below.

This gap may be exacerbated by a trend described as the “seniorisation” of entry-level jobs, where employers increasingly expect new graduates to possess skills traditionally gained through workplace experience. Dr. Rosli highlights that firms often demand such advanced skills at the entry point, a phenomenon facilitated by an oversupply of graduates relative to the available employment opportunities. “Effectively, firms now demand, at entry, skills that can only be learned in the workplace, and they get away with it because they’re spoiled for choice,” he noted.

Recent data from PwC indicates that entry-level positions exposed to artificial intelligence (AI) are seven times more likely to require skills associated with senior roles, with these roles growing by 35% since 2019. However, Dr. Rosli urges caution in attributing these market shifts solely to AI. He references research by Humlum and Vestergaard (2025) reporting no significant effect of AI on earnings or hours worked, and a 2026 study by Lambert and Schindler that highlights the overlap between AI-exposed roles and jobs amenable to remote work. He points out that such trends predated the public introduction of tools like ChatGPT in 2022, suggesting other factors—such as remote work—may be driving these changes.

Despite the uncertainty over causes, the seniorisation trend remains clear. It may be temporary, linked to economic conditions wherein employers demand more experience during market downturns, or it could reflect more permanent structural changes influenced by AI adoption or shifts toward remote work. Both scenarios indicate fundamental alterations in labor market demands.

In light of these developments, experts emphasize the need for companies to balance productivity gains from AI with the imperative to maintain accessible entry points for young jobseekers. Lai, a labor market specialist, warns against viewing productivity and employment opportunities as mutually exclusive. He stresses the traditional importance of clerical and administrative roles as a first step for young workers to build foundational skills, workplace discipline, and professional networks.

Lai suggests that rather than eliminating these positions outright, companies could redesign them. By leveraging AI to handle routine tasks, employees may concentrate on higher-order responsibilities such as problem-solving, stakeholder communication, and decision support. Additionally, structured programs—such as apprenticeships, internships, and job rotations—can provide vital practical exposure despite the shrinking number of traditional entry roles.

Recruitment practices also warrant attention. Employers are cautioned against using AI as justification for demanding advanced skills from fresh graduates without offering avenues for experience acquisition, a practice that risks creating a detrimental “no experience, no job; no job, no experience” cycle. Continuing to hire based on potential, learning agility, and adaptability, coupled with investment in training and mentoring, is recommended.

There is also a call to reinvest some of the productivity improvements made possible by AI into workforce development initiatives. This approach aims to ensure that technological advances support both organizational efficiency and the career progression of new entrants in Malaysia’s evolving job market.