Malaysia’s labour market reached a record high of 9.25 million jobs in the second quarter of 2026, encompassing both employed workers and available positions, but the pace of new job creation showed signs of slowing, particularly in low-skilled roles. According to the Department of Statistics Malaysia (DOSM), newly created jobs decreased by 1.2%, falling to 31,550 from 31,920 in the same quarter last year.
The contraction in job openings was especially pronounced in low-skilled employment, which declined by 17% despite overall growth in labour demand. Sectors experiencing notable reductions in new positions included information and communication (-33%), transportation and storage (-31%), textile, clothing and leather products (-20%), and construction (-11%). The food, beverage and accommodation industry also saw a 22% drop in new hires from the previous quarter.
Experts attribute this trend to employers exercising greater caution amid rising labour and operating expenses, as well as a structural shift toward automation and technology that favors higher-skilled and multi-skilled roles. Datuk Dr Syed Hussain Syed Husman of the Malaysian Employers Federation highlighted that many businesses, particularly micro, small and medium enterprises (MSMEs), now seek workers capable of operating technology, troubleshooting, analysing data, and managing multiple functions rather than performing single, repetitive tasks.
“MSMEs are increasingly reluctant to add low-skilled positions as hiring entails ongoing obligations such as wages, statutory contributions, overtime, and training,” Dr Syed Hussain said. He also noted that minimum wage hikes and increased costs for utilities, rent, raw materials, logistics, and financing have further strained labour-intensive businesses. The most vulnerable jobs include roles in manual repetitive work, data entry, basic administration, cashiering, warehouse and production-line tasks, routine customer service, food preparation, and logistics.
Despite the downturn in low-skilled job creation, semi-skilled workers remain a significant component of Malaysia’s workforce, accounting for 62.1% of total employment and 64.1% of newly created jobs in the first quarter of 2026, according to DOSM data.
Industry representatives echoed these concerns regarding the evolving employment landscape. SME Association of Malaysia president Chin Chee Seong pointed out that escalating labour and operational costs are accelerating adoption of automation, digitalisation, and artificial intelligence within firms. He advocated for targeted support such as automation and AI grants, access to affordable financing, accelerated capital allowances, and practical workforce training programs. Chin emphasized that while foreign investors should be encouraged to develop local suppliers, Malaysian companies investing in technology and expansion deserve comparable support.
Meanwhile, Small and Medium Enterprises Association president Datuk William Ng highlighted that growth in digital commerce is expected to create demand for roles like digital marketing specialists, e-commerce fulfilment coordinators, and data administrators. He cautioned that a reduction in entry-level positions might push younger workers toward gig economy roles as temporary income solutions, potentially delaying their career development and skill acquisition. To address this, he stressed the importance of strengthening industry-led technical and vocational education and training (TVET), promoting micro-credentials, and expanding work-based apprenticeships aligned with business needs.
As Malaysia’s economy transitions, the labour market increasingly favors skilled and adaptable workers, underscoring the need for policies that support digital transformation, workforce upskilling, and sustainable job creation.