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THE nation’s labour market is facing mounting pressure not from widespread retrenchments, but from an escalating shortage of skilled workers that is leaving critical vacancies unfilled across several high-demand sectors, according to business and employer groups.
Industry leaders say recent increases in job losses reflect corporate caution amid global economic uncertainty and rising operational costs rather than a broad collapse in employment conditions.
Malaysian Employers Federation President Datuk Syed Hussain Syed Husman said employers were responding conservatively to increasingly volatile external conditions, including geopolitical instability, supply chain disruptions and weaker export demand.
“External challenges such as supply chain disruptions, geopolitical tensions, softer export demand and higher operational costs have made employers, especially in trade-dependent sectors, more conservative in their hiring and investment plans,” The Star reported him saying.
Rather than aggressively expanding payrolls, many companies are now focusing on retraining existing staff, streamlining operations and increasing automation while temporarily freezing recruitment.
“Malaysia’s labour market is still relatively resilient,” Syed Hussain said.
“Unemployment remains manageable and most employers are trying to retain their current workforce.”
However, he cautioned that sustained increases in operating expenses could place serious pressure on micro, small and medium enterprises, potentially affecting long-term job creation.
“If not carefully managed, prolonged cost pressures could weaken employers’ ability to create and sustain quality jobs,” he said.
He added that policymakers needed to carefully balance worker protection measures with business sustainability and employment growth.
Despite softer hiring activity in some industries, Syed Hussain said sectors such as electronics and electrical manufacturing, healthcare, logistics, renewable energy, tourism and high-value manufacturing continued to actively recruit workers.
Yet employers are increasingly struggling to fill specialised positions, particularly in engineering, artificial intelligence, cybersecurity, digital technology, data analytics, healthcare and skilled supervisory roles.
According to Syed Hussain, vacancies are remaining open for extended periods because many applicants lack the technical competencies, industry exposure and workplace readiness required by employers.
At the same time, employee expectations are evolving rapidly.
“Many MSMEs are struggling to balance rising employee expectations with business realities and cost constraints, amid a widening gap between salary expectations and productivity levels,” he said.
The remarks follow recent figures disclosed by Economy Minister Akmal Nasrullah Mohd Nasir showing that 7,057 workers lost their jobs in April, marking a 21 per cent increase from 5,855 recorded in March.
Meanwhile, SME Association of Malaysia president Dr Chin Chee Seong said the rise in job losses was largely linked to seasonal business slowdowns, contract expirations and tighter cash flow conditions rather than mass retrenchments.
“After festive periods, business activity usually tapers off and hiring becomes more cautious,” he said.
“Part of the increase is due to the expiry of contracts without immediate replacement.”
Chin said weaker demand in the construction, agriculture and manufacturing sectors, combined with rising logistics and input costs, had discouraged many small businesses from expanding operations.
“Higher costs have already deterred many SMEs from expanding. Yet they still face manpower shortages in agriculture, services, hospitality and healthcare,” he said.
He also highlighted structural labour market weaknesses, including heavy dependence on contract workers, restrictions involving foreign labour recruitment, low interest among locals in difficult, dirty and dangerous jobs, as well as an ongoing shortage of technically skilled workers.
Business groups warned that unless Malaysia addresses its widening skills gap and workforce mismatch, labour shortages could increasingly undermine productivity and economic growth even as overall unemployment levels remain under control. - May 27, 2026