KUALA LUMPUR (Sept 17): Malaysia has experienced steady economic growth of over 5% annually in the last couple of years, but overall job creation increased by less than 2% each year, according to a discussion paper published by the PNB Research Institute — the research arm of Permodalan Nasional Bhd.
Amid this sluggish pace of job creation, the paper highlighted that only one high-skilled job was created for every 10 new graduates entering the workforce each year.
At the same time, workers' share of Malaysia's gross domestic product remains stuck at roughly 34%, it said — meaning workers take home only around 34 sen of every ringgit of economic output generated — ranking the country among the lowest against regional, comparator economies.
Post-pandemic economic shifts have worsened the situation, analysis in the report — titled 'A Good Jobs Strategy for Malaysia' — showed, with earlier modest gains in employee compensation effectively wiped out by lagging wage growth in the services sector.
Conventional narratives blamed stagnant wage growth on trailing labour productivity, but the paper argued that while working hours might have declined, they eased from already high levels. Furthermore, it noted that hourly productivity of workers between 2015 and 2024 had actually been improving, citing World Bank's 2026 analysis that introduced an hourly productivity measure into its productivity versus wage analysis.
Hence, it proposed alternative ways to unpack the trend, by recognising that headline productivity gains may reflect reduced working hours despite improved hourly efficiency, the divergence between producer output prices and worker consumer prices, and the role technology investments play in driving productivity.
The paper argued that Malaysia cannot rely solely on productivity growth to create good jobs, as productivity gains do not automatically lead to better worker compensation.
Good jobs are defined as "jobs that provide decent wages, room to develop skills, career progression and economic security across a working life".
Higher paying jobs cannot be engineered through government decrees alone, lest inflation will ensue, threatening competitiveness and demand for firms' output, it warned, citing the 2026 report by World Bank.
To break out of the low-wage trap, the paper's author, Farhana Roslan, called on policymakers to execute a targeted 'Goods Job Strategy' aimed at directly transforming the productive economy.
The strategy is a five-point framework that touches on four policy areas and a new governance model:
- Employer-led talent development: Give employers a bigger role in training design, so skills pipelines match real job vacancies rather than generic government programmes.
- Industrial policy that prioritises good jobs: Operationalise existing plans such as the National Industrial Master Plan 2030 and the National Semiconductor Strategy to bargain for higher-skilled, better-paid jobs in exchange for incentives.
- Labour augmenting innovation and technology: Favour technologies that raise worker productivity over technology that simply replaces workers.
- High labour standards in trade: Align trade and investment rules with quality job creation and long-term wage growth. Stronger safeguards should be in place for labour standards, including measures against “social dumping”, where businesses gain a competitive advantage through weaker labour protections or safety standards.
- A new governance model: Set up provisional targets and provide firms with an efficient channel for information exchange with governments.