Malaysia Population Research Hub

Demographic Resilience: Addressing Malaysia's Demographic Changes

Demographic change has become a common phenomenon worldwide, and Malaysia is no exception. Between 1990 and 2020, Malaysia’s ageing population rose from 3.6 per cent to 7.0 per cent, on the other hand the fertility rate decreased from 3.6 children to 1.7 children (Department of Statistics Malaysia, 2021a). Thus, as life expectancy continues to grow, the population will contain more older people than children and youths.

The demographic change in Malaysia has been in tandem with other developed countries (United Nations, 2017). This change has contributed to a shrinking labour pool and is expected to impact labour market. A decrease in the labour supply implies future economic growth will depend even more heavily on workforce productivity. Many developed countries have perceived skills development as their strategy to adapt to changing workforce challenges arising from demographic changes (International Labour Organization, 2010). Skills development equips workers with the skills to perform their roles. This situation could increase workers’ expertise and productivity and, thus, is crucial for strong and sustainable economic growth.

In light of this, Malaysia needs to rethink how its current skill development policies and practices can match the demographic changes that are taking place. One way Malaysia can develop skills is by providing good quality fundamental education. It is generally acknowledged that having good-quality basic education is an essential prerequisite to further developing skills. Productivity increases when people know how to apply their skills properly in developing and using technologies. The triennial Programme for International Student Assessment (PISA) has shown that Malaysian students have lagged behind in mathematics and science (Organisation for Economic Co-operation and Development, 2018). Poor mathematics and science skills, in turn, may lead to the slow development of technological inventions and usage. Technology changes, which occur at the speed of light, may reduce Malaysia’s competency and cause Malaysians to lag behind their peers and competitors.

In addition, continued training and learning is as important as basic education. In Malaysia, the labour force participation rate in 2021 was 68.6 per cent, however high-skilled workers comprised only 28.2 per cent (Department of Statistics Malaysia, 2022). Even though Malaysia has a high ratio of foreign workers to the total population, most foreign workers have mainly been hired for low-skilled jobs (Ang et al., 2018). The leading cause of the undersupply of a high-skilled workforce in Malaysia is primarily related to job creation in Malaysia. Malaysia mainly creates semi-skilled and low-skilled jobs (Department of Statistics Malaysia, 2021b), and workers lack specific expertise to bridge the skills gap. A shortage of high-skilled workers coupled with a shrinking labour supply could lead to a war for talent, reducing the workforce’s productivity. A shortage of high-skilled workers has also been a concern among Malaysia’s population, and many have urged the Malaysian government to produce a larger high-skilled workforce (Azman, 2021). Besides, industries are facing challenges due to a widening skills gap in the workforce. The needs of the industries have not been matched with the talents produced by the education system (NST Education, 2019). Researchers and practitioners affirm that solid bridges between education and workplaces enable workers to learn the “right” skills (Allais, 2012). Hence, partnerships between various organisations, including government, employers and training institutions, are very important to nurture workers to access effective training and skill development. This outcome could assist workers in advancing their careers to stay relevant and meet the industry’s needs.

In the future, the need in Malaysia for a workplace transformation is becoming increasingly urgent. Prevention is always better than cure. With an ageing population and a low fertility rate, Malaysia must head towards a better educated and more skilled workforce to continuously improve productivity. Working smarter is key to addressing the challenge of Malaysia’s demographic changes towards competitiveness and efficiency. This outcome can help Malaysia turn demographic challenges into opportunities.


Allais, S. (2012). Will Skills Save Us? Rethinking the Relationships between Vocational Education, Skills Development Policies, and Social Policy in South Africa. International Journal of Educational Development. 32(5): 632 – 642.

Ang, J. W., Athreya, M. and Chai, Y. W. (2018). Low-Skilled Foreign Workers’ Distortions to the Economy. Bank Negara Malaysia.

Azman, N. H. (2021, July). Malaysia needs High-Skilled Talents Post-Pandemic. The Malaysian Reserve.

Department of Statistics Malaysia (2021a, October). Vital Statistics, Malaysia, 2021.

Department of Statistics Malaysia (2021b, May). Employment Statistics First Quarter 2021.

Department of Statistics Malaysia (2022, April). Labour Force Survey Report, Malaysia, 2021.

International Labour Organization (2010, November). A Skilled Workforce for Strong, Sustainable and Balanced Growth. A G20 Training Strategy.

NST Education (2019, June). Preparing Undergraduates for the Workplace. New Straits Times.

Organisation for Economic Co-operation and Development (2018). Programme for International Student Assessment (PISA) Results from PISA 2018.

United Nations (2017). Changing Population Age Structures and Sustainable Development. A Concise Report. ST/ESA/SER.A/XXX

Pemenang Pertandingan Penulisan Esei Kependudukan Bersempena Sambutan Hari Penduduk Sedunia 2022: Ong Sheue Li & Wong Tee Hao, Universiti Malaya (UM)