To remain globally competitive, Malaysia must accelerate its transition from qualification-based hiring to skills-based human resource frameworks, says Malaysian Employers Federation president Datuk Dr Syed Hussain Syed Husman.
He said achieving this transformation requires a balanced approach that blends incentives, awareness and structural reform – rather than compulsion.
According to the Financial Industry Collective Outreach (Finco) TVET in Malaysia: Perceptions vs Reality report, 33% of employers refrain from hiring technical and vocational education and training (TVET) graduates due to internal company policies, highlighting structural barriers within organisational hiring frameworks rather than flaws in the TVET system itself.
“Many organisations still maintain traditional hiring criteria that exclude TVET graduates who possess job-ready skills aligned with industry needs,” he said.
He explained that internal job grading systems, built around degree-based entry requirements, limit recruitment flexibility.
This rigidity discourages skills-based hiring and slows labour market adaptability, he said, adding that limited career progression pathways for TVET graduates further reinforce negative perceptions.
Syed Hussain noted that while reform is necessary, it must be encouraged through practical, incentive-driven strategies.
He proposed tax deductions, training grants and wage subsidies for companies that hire or upskill TVET graduates.
He said presenting “Employer Skills Excellence Awards” to organisations can encourage the adoption of competency-based practices, and capacity-building programmes for human resources professionals can redesign job roles based on actual workplace skills in the private sector.
“Public-private alignment is equally important. The Public Service Department, together with private sector employers, could review national job classification frameworks to ensure parity between academic and skills-based pathways.
“Recognising prior learning and creating clearer progression routes would also motivate more youth to pursue vocational training,” he said.
Echoing similar sentiments, Finco chief executive officer Clare Walker said it is timely for industry leaders to revise hiring policies to focus on skills competency instead of qualification levels.
“It only takes a few forward-looking organisations to take the first step before a cascading effect follows,” she said, adding that strict degree requirements persist even in industries where technical ability matters more than academic qualifications.
“Sectors like media and communications, banking and finance, business administration, and marketing still prefer degree holders despite offering TVET-related roles,” she said.
Walker added that shifting hiring policies to focus on skills competency could unlock a valuable pool of hands-on talent.
She also urged industries to collaborate with TVET institutions to design graduate programmes that equip diploma holders with managerial skills.
“When hiring practices become more inclusive and reflective of actual job demands, TVET graduates will have fairer access to opportunities, and industries will gain a workforce that’s skilled, future-ready and entrepreneurial,” she said.
