The Paradox of Malaysia’s Job Market: Choosy Yet Complaining
MALAYSIA’S job market is facing a curious situation. While many job seekers complain about a lack of employment opportunities, employers report difficulty filling positions because candidates are increasingly selective. This paradox highlights a mismatch between expectations, with both sides struggling to find common ground. As Malaysia’s economy evolves, driven by growth in technology and services, job seekers’ expectations have changed. Today, many are seeking more than just a paycheck—they prioritize work-life balance, career progression, and competitive salaries. This is especially true for graduates, who often reject roles in industries like manufacturing, agriculture, or retail, even though these sectors offer stable jobs and face labor shortages. A significant reason behind this paradox is the mismatch between the skills that job seekers possess and those in demand. The digital economy in Malaysia is rapidly expanding, creating high demand for technical skills in fields like data analytics, cybersecurity, and software development. However, many candidates, particularly those with non-technical degrees, lack these skills and are left waiting for jobs in industries where demand has stagnated. The COVID-19 pandemic has further amplified these preferences. Many candidates now seek remote or flexible work arrangements, and they are often unwilling to accept jobs that don’t offer these perks, contributing to perceptions of job scarcity. At the same time, traditional sectors such as construction, oil and gas, and hospitality are struggling to attract workers. Many job seekers view these industries as less desirable, due to perceived lack of growth opportunities or the need for on-site work, despite these fields offering job security and development potential. Many job seekers are also driven by the pressure to land the “perfect” job—one that matches their qualifications, offers a high salary, and includes flexibility. This anxiety leads some candidates to turn down reasonable offers, hoping for something better, which fuels the perception that there are few jobs available. This selectiveness has contributed to a rise in underemployment, where highly educated individuals take on roles that don’t utilize their qualifications while waiting for better opportunities. This further adds to the frustration among job seekers, who feel they are overqualified for the available positions. To address this issue, both job seekers and employers need to make adjustments. Employers must offer more competitive wages, clearer career pathways, and consider flexible work arrangements to attract talent. Additionally, investing in training programs to equip employees with in-demand skills can help close the talent gap. Job seekers, on the other hand, may need to adjust their expectations and be open to roles that may not align perfectly with their goals. By gaining experience and skills in these roles, they can create pathways to more ideal positions in the future. In conclusion, while job seekers in Malaysia complain of limited opportunities, their increasing selectiveness points to a larger issue of misaligned expectations. By finding a balance between what candidates want and what the market offers, both sides can work together to resolve this paradox and improve the labor market.
Staff retention has become a critical issue in Malaysia
Staff retention has become a critical issue in Malaysia, where businesses are facing a challenging people resources market, particularly, where experienced and skilled professionals are in high demand but difficult to retain. A key factor driving employee turnover in Malaysia is demand for higher salaries, largely due to inflation. This is further compounded by the favorable currency exchange rates and job offers overseas. Many offers come in the form of a 30-40% salary increase by just factoring in the currency exchange. So, there is much work to do on the non-monetary retention strategies. Another factor is hybrid working conditions as Malaysian employees are prioritizing this factor for work-life balance, lifestyle, and building positive relationships with colleagues and managers. However, many executives and business owners still believe work is best performed in an office setting, thus creating an expectation gap that underscores the tension between employee preferences and employer expectations. Then there is the workforce generational shift from Baby Boomers to Gen-Xs, to Gen-Ys and millennials, whereby Employee Wellness is a hot topic. Psychological Safety and DEI (Diversity, Equity and Inclusion) are some of the areas employees look for. They want to be in an Ecosystem that promotes diversity, which is representation and participation from the various groups of people, promotes equity with expectations to be treated fairly, in compensation, in opportunities, in development, and so on. Inclusion then, is about the practice of diversity whereby all individuals and groups are welcomed, supported, respected and valued. Here are some strategies that can help to address retention challenges: Enhanced Career Development Opportunities and Exposure: Companies need to offer clear career plans, support for upskilling and reskilling efforts, with customized learning and development plans and structure to retain top performers and specialized talents. Flexible Workplace Arrangement: Embracing hybrid and remote work options that balance workplace flexibility and operational effectiveness including a review of workforce readiness for such arrangements. Companies and employees must be transparent, mutually agree and that it’s not taken for granted. Focus on Employee Well-being: Employers must invest in workplace wellness programs including mental health programs, stress management counselling, and build a healthy work-life balance culture. Psychological Safety for employees and employers alike, where one can be an authentic self without the fear of retribution. Embrace AI: Employers and employees to responsibly embrace AI to enhance their work, business and workplace, which ultimately enhances the working experience, especially to remain relevant. Conclusion, there is a need to narrow the Expectation Gap between employers and employees to that everyone benefits. Be responsible to adapt to the new ways of working by having an agreed work arrangement and structure, including contingency plans. Nurture and build a customized Workplace Ecosystem that is sustainable, scalable, replicable, equitable, and inclusive, with special attention put on Employee Wellness from a psychological and physical perspective. And finally, AI is here to stay, and it will get better and better, embrace it to provide business and career continuity and security.
The State of Recruitment Growing Costs and Concern
Malaysia | Against the backdrop of ongoing economic challenges and changing employer-employee dynamics, hiring managers in Malaysia are navigating new complexities in their quest for talent, a report from Employment Hero, the world’s leading HR, payroll and employee engagement platform found. According to ‘The State of Recruitment Growing Costs and Concerns’, rising costs in the hiring process is a key concern for hiring managers in the country. They cited higher salaries due to the cost of living (52%), labour shortages (37%), and increased job board posting costs and recruitment recruiter fees (32%) as key factors. On average, it takes hiring leaders 41 days to fill a role in Malaysia and Singapore — the longest period of time needed out of all the other countries surveyed (Australia, New Zealand and the UK). Their challenges don’t end there. Once hired, 19% of candidates do not pass probation or remain in their role after the first six months, which complicates the hiring process. 23% of hiring leaders mentioned that this factor contributes to hiring costs increasing. “The data from the report underscores the complexities of today’s hiring landscape in Malaysia. Rising costs, longer hiring cycles and the struggle to retain talent during the crucial probationary period are hurdles hiring managers face daily,” said Ben Thompson, CEO and co-founder of Employment Hero. “To address these shifts, businesses need to adopt a holistic approach to hiring and retention – one that includes using technology to streamline and improve the hiring and employee onboarding process.” The impact on small businesses In Malaysia, the small businesses face a distinctive challenge. A staggering 86% of hiring leaders agree that small businesses struggle to compete for talent with multinational corporations, and 81% agree that the costs of job boards are prohibitive to them. Diving deeper, 97% of hiring leaders in small and medium-sized enterprises found their hiring challenges linked to their inability to match large organisations’ salaries, and 96% cited not providing similar perks as the cause. “The rising costs of recruitment creates a significant disadvantage for local SMEs, leading them to invest countless manual hours in the hiring process, which further impacts their productivity and profitability. SMEs are the backbone of Malaysia’s economy – so it is crucial to ensure they have access to seamless recruitment processes and equal opportunities to attract and retain the best candidates,” Kevin Fitzgerald, Managing Director, Asia, at Employment Hero. The ‘State of Recruitment: Growing Costs and Concerns’ highlights the current state of the recruitment landscape amid ongoing economic and macroeconomic challenges in Malaysia and Singapore. The report surveyed 515 business leaders in Singapore and Malaysia from across different organisation sizes and industries. Read more here.
Wage Hikes in Budget 2025
On 18th October 2024, the presented Malaysian 2025 Budget introduces a significant increase in the national minimum wage, raising from RM1,500 to RM1,700 per month, effective 1st February 2025. This brings joy to those affected whilst it does have wide implications with notable impacts on both businesses and employees. This will potentially strain Small and Medium-sized enterprises (SMEs) with increased labor costs in an already high cost environment. Another impact is EPF will be mandatory for non-citizen workers where the impact will be significant, their wage cost will increase 28%. The effects for Businesses especially SMEs, that rely on cost effective resources, will face tighter profit margins, potentially leading to outsourcing, reducing operational costs, investing in AI & Technology, or downsizing. The effects for the impacted employees benefits from a boost of their disposable income, improving their ability to cope with the rising cost of living. Employees in retail, manufacturing and services are expected to experience the most significant benefits. Higher wages could lead to improved job satisfaction and motivation; however, some employees may face job cuts or reduced hours if businesses struggle to manage the increased wage costs. Ultimately, while the wage increase aims to reduce poverty and support the workforce, businesses will need to adapt to minimize negative impacts on profitability and employment. Businesses can adopt several strategies to manage the minimum wage increase while maintaining employee satisfaction and fairness: Review and Adjust Salary Structures: Ensure Internal Equity to avoid disproportionate wage gaps by implementing salary structures that reflect performance, experience, job fit and complexity. Enhance Performance Management: Link wage increases to performance and reward high-performing employees via merit-based bonuses and specific career enhancing programs. This will also foster and inculcate a culture of performance, productivity and continuous advancement. Invest in Employee Well-being and Career Development: Offer non-monetary benefits to reduce dependency on wage budgets such as flexible hours, career development opportunities, specific training and wellness programs; which will also boost job and workplace satisfaction. Optimize Operational Efficiency: Increase focus on core business and revenue to offset higher labor costs and profit margin pressures by Outsourcing part of the operations to BPO organizations, invest in AI and Technology. Increase Employee Engagement and practice Open Communication: Prevent perceptions of unfairness among staff by providing One-to-One Employee engagement to understand specific personal needs and concerns; and give explanations on the rationale behind pay adjustments to ensure transparency. Overall, Malaysia’s 2025 budget positions itself as a response to both local economic needs and global challenges, with the minimum wage increase as a central part of efforts to foster sustainable growth and protect vulnerable workers. Henceforth, it is imperative that businesses start their readiness program now to ensure that come 1st February 2025, they have clearly communicated the wage increase program and how it will be operated. Ensure everyone in the company is clear about the implications, the positives, the negatives, and that all concerns have been put to rest. This ensures employee motivation and business continuity.