This article first appeared in The Edge Malaysia Weekly on July 20, 2026 - July 26, 2026

Malaysia’s unemployment rate has trended lower since the Covid-19 pandemic and remained low at 2.9% for the first five months of this year (5M2026). Yet the fact that high-skilled workers accounted for over half of retrenchments from 2021 to 2025 and formed the “largest affected group in 5M2026” warrants a closer look.

This detail — noted by economists at Maybank Investment Banking Group who had pored over workers retrenchment statistics issued by the Social Security Organisation’s Employment Insurance Scheme (SOCSO-EIS) after data showed rising annual job losses since 2023 — should not be brushed off even though there are still more job placements than job losses currently.

Whether Malaysia is not creating enough high-skilled jobs or if high-skilled jobs are really being replaced by artificial intelligence (AI) are key factors that policymakers need to study and determine quickly. Resources necessary to retrain and offer temporary income support for lower-skilled workers and high-skilled workers will be different.

If indeed high-skilled professionals or knowledge workers are being displaced by automation or generative AI faster than new roles are emerging, Malaysia will face a profound structural challenge.

However, there might not be any cause for alarm. Noting business closures and corporate downsizing to be key reasons for job cuts, the Maybank report offered some reassurance by pointing to the tendency for high-skilled workers to take up voluntary separation schemes or early retirement packages.

Still, going by how fast generative AI is developing, Malaysia needs to be on the lookout to make sure it is not blindsided if indeed the data is early warning of something deeper.

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