This article first appeared in Forum, The Edge Malaysia Weekly on November 11, 2024 - November 17, 2024

In a country’s race to future-proof its workforce, the spotlight often falls on the young — fresh graduates who represent the future fuel of economic growth. There is a lot of emphasis on improving the education system and vocational schools to improve the overall quality of these new entrants. But what about those already in the race, the middle-aged workers whose experience and knowledge form the backbone of our industries?

Budget 2025 has rightly prioritised initiatives to enhance youth employability and industry alignment, ensuring that the next generation will be prepared for the demands of a technology-driven future. One prominent measure is the extension of incentives under the Structured Internship Programme (MySIP) until 2030. The programme offers young talents hands-on experience and fosters alignment between academic and industry needs. In addition, the allocation to Technical and Vocational Education and Training (TVET) was raised to RM7.5 billion compared with RM6.8 billion this year, which will help equip the Malaysian workforce with skills in high-demand fields.

However, I believe that the future-readiness of our workforce does not just lie in the hands of the youth but also in the capabilities of our existing seasoned workforce. The economic and societal benefits of investing in the upskilling of middle-aged and older employees, or the “silver workforce”, are commonly underestimated despite this group’s growing importance in a rapidly ageing society. Addressing this gap could fortify Malaysia’s labour market resilience and strengthen the economy, an opportunity too vital to be taken lightly.

The demographics speak for themselves. Malaysia’s population is ageing rapidly, with the Department of Statistics Malaysia projecting that by 2040, about 14% of Malaysians will be aged 65 and above, a sharp increase from around 8% this year. Concurrently, the share of the working-age population is set to decline, from 70% this year to around 67% by 2040. This shift, paired with declining birth rates, will drive up Malaysia’s dependency ratio, leaving fewer working-age individuals to support a growing older population.

This shift underscores a critical reality: As the number of new workforce entrants decelerates, the Malaysian economy will increasingly rely on the productivity and adaptability of its seasoned workers. Without targeted upskilling efforts, this silver workforce risks stagnating and falling behind in a rapidly digitalising, high-tech economy. Failure to equip middle-aged workers with relevant skills could dampen overall productivity and limit future wage growth potential, as these workers may lack the skills needed to thrive in emerging industries.

The economic benefits of an upskilled older workforce are manifold. Increased productivity and innovation, and reduced skills shortages are just a few of the advantages. The retention of experienced workers also preserves institutional knowledge and enables mentorship for younger employees, creating a more resilient and adaptable economy. The potential benefits of supporting our silver workforce extend beyond productivity gains. An older workforce that remains employed and productive eases the fiscal burden on social welfare programmes, as fewer retirees would require public financial assistance.

Countries such as Singapore and Germany have recognised the need for structured, lifelong learning initiatives to address this gap. Singapore’s SkillsFuture initiative, for instance, offers grants and credit to help workers of all ages pursue skills training. This has not only encouraged older employees to remain engaged in the workforce but has also proven economically beneficial by mitigating skill shortages in key sectors. Malaysia, too, could reap similar rewards by creating a greater variety of incentives and further emphasise the importance of lifelong learning and upskilling of the middle-aged workforce. This will ensure that valuable experience and industry knowledge are not lost to obsolescence.

To be fair, Malaysia has existing structures that can help bridge this gap. The Human Resources Development Fund (HRDF) provides upskilling programmes for employees across various sectors. However, more targeted policies and funding focused specifically on the silver workforce would be particularly impactful. Measures such as tax incentives for companies that invest in training older employees or allocating dedicated HRDF resources for middle-aged workers could encourage broader adoption of these practices.

As the economy continues to digitalise, policies that support training in digital skills, artificial intelligence and automation technologies for older workers will enable them to remain relevant in their fields and contribute meaningfully to the economy. Additionally, industry-specific initiatives in fields like manufacturing, healthcare, and information technology would allow experienced workers to transition smoothly into roles that match current market demands.

Malaysia’s workforce challenges are not merely generational, they are structural. Ensuring that older workers are empowered will enable them to remain relevant in their fields and contribute meaningfully to the economy. If we want to build a future-ready Malaysia, we must ensure that our workforce development initiatives keep pace with the needs of our present labour force — including the invaluable silver workforce.

Woon Khai Jhek, CFA is a senior economist and head of the Economic Research department at RAM Rating Services Bhd

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