JAKARTA – Malaysia’s unemployment rate is low. However, behind the official figure of only around 3 percent, millions of highly educated workers work not according to their education and skills.
The Straits Times, quoted on Friday, July 3, reported that the issue was seen from Irene Chong, 24, a communications graduate from a private university in Kuala Lumpur. After graduating in 2022, he did not get a job in his field and eventually worked in a clothing store in a shopping center in Melaka.
“I’ve tried everywhere, even the call center, but there’s been no news,” Chong said.
With a RM100,000 education loan or about S$31,720 to pay, Chong took up a retail job in 2023 while still looking for other opportunities. He admitted to being ashamed to continue to depend on his parents.
“My parents thought university was the way to get a better job, and they spent a lot of money on it,” Chong said.
“But now I fold clothes, say ‘welcome’ to customers, smile, and take two shifts. I don’t see a future,” he said.
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Statistically, Chong still counts as working. Government data shows Malaysia’s unemployment rate has remained at 2.9 percent for five months since November 2025, the lowest level in 11 years, before rising slightly to 3 percent in April.
However, economists interviewed by The Straits Times assessed that the figure covered a deeper problem, namely half of the unemployed were related to skills. This means that someone is working, but their job is not in line with or does not fully use the education, training, and abilities they have.
In 2024, about 2.06 million people in Malaysia were in this condition. The number continues to rise and includes 36 percent of highly educated workers, according to the government’s 2026 Labor Statistics.
Data tracking graduates shows that initial employment absorption is weaker in the fields of education, services, agriculture, social sciences, journalism and information, as well as art and humanities. The condition is different from the fields of technology and engineering.
The picture of the tight labor market was seen on June 14. Videos on social media showed about 1,000 people queuing up to 2 kilometers to compete for a maximum of 500 vacancies in Infineon Technologies’ open interview at the Holiday Inn, Melaka.
Aisyah Muhammad Hanif, 22, was in line for the selection. He graduated in business, but has worked in restaurants for the past few years because he hasn’t found another job.
“I found out about this vacancy from friends who were also trying their luck,” he said.
Infineon is opening production operator and technician positions with an initial salary of RM3,500. This amount is higher than the Malaysian monthly median salary of RM3,167 as of December 2025.
Independent economist Doris Liew said Malaysia still produces many business, humanities and social science graduates. However, the country lacks technical talent in the fields of engineering, software development and advanced manufacturing.
“This mismatch is becoming more visible as countries seek to move up the value chain in sectors such as semiconductors, digital services, and high-value manufacturing,” said Liew.
According to Liew, talent shortages are a major obstacle to industry growth. Similar issues are also experienced by mid-career workers because retraining and lifelong learning have not developed strongly.
The Straits Times also noted that Penang is often used as an example. The state has long faced a shortage of skilled labor in the semiconductor sector. Penang now accounts for about 13 percent of global semiconductor assembly, testing, and packaging.
In Penang, multinational companies see the talent crisis as an industry problem. In 1989, they prepared a white paper for the state government. From there, the Penang Skills Development Centre or PSDC was born, a training center led by the private sector and supported by the government.
“The industry is evolving, technology is evolving. We can’t just sit and do the same old training,” said PSDC Chief Executive Officer Hari Narayanan.
In 37 years, about 300,000 people have taken part in the PSDC program. The training has evolved from production line operators to chip design and precision machining.
Johor is also trying to follow in that footsteps. Johor Corporation has been working with PSDC since 2018 to develop industry-based technical programs, including vocations and soft skills through Skills Johor.
However, skills are not the only issue. Economist Muhammed Abdul Khalid from Universiti Kebangsaan Malaysia said labor productivity rose 5.3 percent in 2019 to 2024 according to Bank Negara Malaysia. But real wages per worker actually fell 1.9 percent in the same period.
Inflation and rising living costs have eroded nominal wage increases, weakening workers’ purchasing power.
Muhammed assessed that Malaysia needed to change the direction of industrial policy. Incentives should no longer be based on low-end assembly plants, but should be directed at attracting advanced technology and research companies.
The Malaysian government has promised fiscal support of at least RM25 billion through the National Semiconductor Strategy. The 2025 budget also provides RM1 billion in strategic investment funds and expands export tax incentives to integrated circuit design, which is the design of the main components in electronic chips.
According to Muhammed, the problem is not only a matter of choosing a college major. If the available vacancies are still retail and administration, graduates with higher degrees are still at risk of working outside their abilities.
“It is a myth that graduates will magically get a good job if they take a different field of study or if the university offers more technical programs,” said Muhammed.
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language.
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