Malaysia’s challenge is increasingly not just creating jobs, but creating enough well-paying, secure and high-skilled jobs to match the country’s expanding pool of educated workers, according to a new discussion paper published by the PNB Research Institute (PNBRI).
The paper, A Good Jobs Strategy for Malaysia, authored by Farhana Roslan, argues that strong economic growth has not translated proportionately into higher worker compensation or sufficient quality employment, leaving Malaysia with a structural undersupply of what it defines as “good jobs” — positions offering decent wages, security, career progression and social protection.
While Malaysia’s economy has recorded annual growth of more than 5% in recent years, job creation — particularly high-skilled employment — has expanded by less than 2% annually, the paper noted.
The mismatch is particularly evident among graduates.
The study’s executive summary estimates that Malaysia has generated, on average, roughly one high-skilled job for every 10 new graduates entering the workforce annually. Its more detailed post-pandemic analysis found around seven graduate outputs for every new high-skilled job, while fewer than one-third of new jobs created in 2025 were classified as high-skilled.
At the same time, much of recent employment creation has been concentrated in relatively lower-value-added services such as wholesale and retail, food and beverage, accommodation, transportation and storage. Only about a third of newly created services jobs came from higher-paying areas such as ICT, financial services and other professional or public services.
Low Pay Remains A Structural Issue
The paper estimates that around 30% of Malaysian formal-sector workers were in low-pay employment as of December 2025, based on a wage of RM2,064 at the 30th percentile.
It also highlighted the gap between wages and living costs. In Kuala Lumpur, for example, DOSM’s basic expenditure benchmark was estimated at RM3,969 a month for a single individual with an elderly dependant and RM6,530 for a married couple with two children in 2024. Half of formal-sector employees in the capital earned RM3,687 or less.
Malaysia’s compensation of employees has also remained at around 33% to 34% of GDP, substantially below several comparator economies. The paper said pre-pandemic improvements have partly reversed, with employee compensation as a share of GDP falling 3.8 percentage points between 2020 and 2024 after rising 5.6 percentage points during the preceding decade.
Young workers appear particularly exposed. The paper cited research showing that at least a third of Malaysian graduates experienced skills-related underemployment, while the wage premium associated with tertiary education has narrowed over time. For workers aged 25 to 29, median wages were estimated to have declined by RM238 in inflation-adjusted terms compared with pre-pandemic levels.
Jobs Should Not Be Treated As By-Product Of Growth
The paper argues that Malaysia should move away from assuming that stronger economic growth will automatically generate enough quality jobs.
Instead, it proposes an explicit “Good Jobs Strategy” that places the quality of employment alongside productivity and investment as an economic policy objective.
“A Good Jobs Strategy” would complement rather than replace wage-setting institutions and social protection, with policy interventions focused more directly on how businesses invest, expand and create employment.
The proposed framework has five main elements: more employer-linked active labour market programmes; aligning industrial policy incentives with quality-job creation; promoting technologies that augment rather than simply displace labour; incorporating stronger labour standards into trade policy; and establishing a more collaborative governance model between government and businesses.
For training programmes, the paper calls for greater employer accountability, with businesses and industry bodies helping design training around genuine vacancies instead of relying mainly on generic training schemes.
It also proposes embedding employment-related conditions into existing industrial incentives. Companies receiving grants, tax breaks or other support could, for example, make commitments on the number and skill levels of jobs created, employee training and greater use of local suppliers.
Rather than creating an entirely new industrial strategy, the paper argues that Malaysia could incorporate the good-jobs objective into existing programmes such as the New Industrial Master Plan 2030 (NIMP 2030) and National Semiconductor Strategy.
NIMP 2030 itself targets manufacturing employment of 3.3 million people by 2030 and a median manufacturing salary of RM4,510, up 128% from its RM1,976 baseline.
Technology Must Raise Worker Productivity
Technology policy is another key component.
Instead of framing automation and artificial intelligence solely around job displacement, the paper calls for policies encouraging labour-augmenting technology that allows workers and machines to become more productive together.
It argues that Malaysia’s longer-term challenge remains moving away from a low-skilled, labour-intensive economic model towards higher-value activities supported by greater investment, technology and skilled employment.
The report highlights Malaysia’s electrical and electronics industry as an example of how upgrading into higher-value segments can gradually shift employment towards more skilled positions. However, it cautions that manufacturing alone will not be sufficient, given the large role of services in Malaysia’s economy, making the development of scalable, technology-intensive modern services equally important.
Ultimately, the paper argues that Malaysia’s labour challenge cannot be resolved solely through higher minimum wages, education or social assistance if businesses are not generating enough productive, well-paying positions.
Its central proposition is that job quality needs to become an explicit outcome of economic and investment policy rather than something expected to emerge automatically from GDP growth.
The paper states that its findings and policy directions are those of the author and do not necessarily represent the official views of PNBRI or the PNB Group.
