High-skilled workers account for majority of Malaysia retrenchments despite smaller workforce share

High-skilled workers have borne the brunt of job losses in Malaysia over the past five years, accounting for more than half of all retrenchments between 2021 and 2025 despite representing less than one-third of the country's workforce, according to Maybank Investment Bank.

The research house said managers, professionals, technicians and associate professionals consistently recorded the largest share of retrenchments during the period and remained the most affected group in the first five months of 2026.

Maybank attributed the trend partly to the prevalence of voluntary separation schemes (VSS), mutual separation schemes (MSS) and early retirement packages, which have consistently ranked among the leading causes of retrenchments. 

The bank noted that higher-skilled employees are generally more likely to accept such schemes because of relatively attractive compensation packages and stronger prospects of securing new employment.

As of the first quarter of 2026, high-skilled workers accounted for 30.5% of Malaysia's workforce. By comparison, semi-skilled workers represented 56.7%, while low-skilled workers made up the remaining 12.8%.

The findings come as Malaysia continues to face elevated retrenchment levels amid global economic uncertainty.

According to data from the Social Security Organisation (PERKESO), 42,807 workers were retrenched nationwide between January and 12 June 2026. Around 40.85% of these job losses were linked to business closures and company downsizing.

Manufacturing recorded the highest number of retrenchments, with 8,702 workers losing their jobs, accounting for 20.7% of the total. The sector has been affected by rising domestic operating costs and weakening global demand, which has continued to disrupt supply chains.

Wholesale and retail trade was the second hardest-hit sector, recording 7,560 retrenchments, followed by administrative and support services with 4,239 job losses.

To support displaced workers, PERKESO approved 134,123 claims under the Employment Insurance System (EIS), with recommended payouts amounting to RM248.23 million. The benefits include job search allowances, reduced income allowances, early re-employment incentives, training fees and training allowances aimed at helping workers transition back into employment.

The Ministry of Human Resources has also expanded assistance through the Progressive Acceleration for Capability and Employment (PACE) Economic Resilience Package, backed by more than RM580 million under the EIS.

The initiative is expected to support over 56,000 retrenched workers through financial aid, job placement programmes, employment support services and re-employment interventions.

Human Resources Minister Datuk Seri R. Ramanan said the government is reviewing the Employment Insurance System Act 2017 to strengthen worker protections.

The proposed amendments include enhanced benefit rates for early re-employment, training allowances and training fees, as well as the introduction of a Mobility Assistance Allowance to encourage workers to relocate to areas with stronger labour demand.

"Through PERKESO, the ministry has established a comprehensive social safety net to ensure no worker is left behind in facing the current global uncertainties," Ramanan said. "Beyond financial assistance, our priority is to ensure workers affected by retrenchment receive immediate support through employment services to help them return to the labour market as quickly as possible."

The ministry said PERKESO employment services officers have been tasked with providing career counselling, targeted job matching and ongoing monitoring of retrenched workers to speed up their return to employment.

Alongside financial support, Malaysia is also stepping up upskilling and reskilling efforts. Between January and 24 April, 2,697 insured jobseekers were approved for modular training programmes. During the first five months of 2026, PERKESO organised 2,989 career fairs and interview sessions across the country, attracting 86,594 jobseekers.