PETALING JAYA: The share of young workers in Malaysia’s labour force is gradually declining as the country’s population rapidly ages and birth rates decline.
The decline, combined with the loss of skilled workers abroad, could make it harder for the country to build a high-value economy, experts say.
Data from the Department of Statistics Malaysia’s MyLabourHub portal shows that Malaysians aged 15-29 made up 32% of the labour force in 2025, down from 35% in 2013.
Over the same period, workers aged 35-44 increased their share from 23% to 27%, with their numbers growing by nearly 50% - far outpacing the 18% growth among those aged 20-24 and the 10% increase among those aged 25-29.
Universiti Malaya Distinguished Professor of Economics Rajah Rasiah said the shift was largely an expected outcome of Malaysia's demographic transition, with declining birth rates reducing the number of young people entering the workforce.
He said the trend was compounded by the continued outflow of Malaysians seeking jobs overseas, noting that many of those leaving were educated and skilled workers attracted by higher wages and better working conditions.
"This trend is detrimental to Malaysia as the country seeks to upgrade its economic activity to higher value-added sectors," he said.
Rajah said expanding technical and vocational education and training (TVET) was important, but retaining skilled workers was equally critical.
He also called for stronger lifelong-learning programmes and continued improvements to Malaysia's applied universities to prepare a more experienced workforce for future industries.
Dr Wan Arnidawati Wan Abdullah, head of the Laboratory of Social Gerontology at the Malaysian Research Institute on Ageing (MyAgeing), said fewer young workers may give them greater bargaining power, but only if the economy creates enough quality jobs.
She said Malaysia had long produced graduates faster than it created graduate-level jobs, leaving many diploma and degree holders in low- or semi-skilled employment.
Department of Statistics Malaysia data showed that skill-related underemployment affected 1.96 million workers in the third quarter of 2025 and accounted for 35.5% of employed diploma and degree holders.
"At present, there may be fewer young workers, but there are still not enough high-skilled positions.
“As a result, many young Malaysians compete for jobs below their qualifications instead of receiving better salaries and employment conditions," she said.
Wan Arnidawati said younger workers could face slower career progression as older employees remain in the workforce for longer.
"As workers aged 35-44 form a large share of the workforce, many middle- and senior-management positions are increasingly occupied by workers who may remain in the workforce for another 20 years or more.
“This could lengthen the time younger workers wait before moving into leadership roles," she said.
She stressed that the issue should not be viewed as competition between generations, but as a broader challenge of insufficient quality jobs and career pathways.
"The issue is not that one generation has deprived another of opportunities.
“The larger problem is that the economy has not created enough good jobs and career opportunities for everyone," she said.
Wan Arnidawati said Malaysia needed to create more high-skilled, high-value jobs to ensure graduates could fully utilise their qualifications.
"Malaysia needs industrial policies and investment incentives that reward employers for creating high-quality jobs, rather than focusing only on the number of jobs created.
"Training alone cannot solve the problem if the economy continues to create too few graduate-level jobs," she said.
HELP University economics expert Prof Dr Chung Tin Fah said the demographic shift reinforced the need for Malaysia to move away from a low-cost labour model, as the country could no longer rely on a large supply of young workers to sustain labour-intensive industries.
He said Malaysia should focus on strengthening its competitiveness in higher value-added goods and services.
This could be achieved by upgrading workers' skills, expanding education and technical training, and encouraging the establishment of foreign technical colleges.
Chung added that policies such as a progressive wage scheme would help attract and retain skilled talent.
"Malaysia needs to progress to higher value-added goods and services if it wants to move out of the middle-income trap," he said.
