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As concerns grow over skilled Malaysians working abroad, KESUMA has outlined wage, skills and labour reforms for 2026. From progressive wages to TVET expansion, here’s a clearer look at what’s changing and why it matters.
Malaysia could lose up to 0.4% of its gross domestic product (GDP) annually if skilled talent outflow continues. Acknowledging this as a pressing concern and the risk involved, the Ministry of Human Resources (KESUMA) said unmanaged talent mobility could have longer-term economic implications.
Data cited by KESUMA points to clear economic drivers behind the trend. Almost 94.5% of Malaysians working in Singapore are attracted by higher wages, while close to 88.8% feel their pay in Malaysia does not reflect their skill levels. Cost-of-living pressures further widen the gap, as workers in Singapore need fewer working hours to meet basic needs.
Why minimum wages are no longer enough
While the RM1,700 minimum wage introduced in 2024 addressed basic subsistence needs, KESUMA acknowledged that minimum wages alone are insufficient to retain skilled workers.
Current data shows signs of wage compression, where differences between entry-level and higher-skilled roles remain narrow. This has strengthened the case for clearer wage progression pathways that go beyond minimum thresholds.
Progressive wage policy moves into full implementation
In response, the National Wages Consultative Council (NWCC), together with KESUMA and the Ministry of Economy, has moved the progressive wage policy into full-scale implementation.
The policy links wage growth to productivity, skills development, and career progression, with the aim of supporting better pay outcomes while strengthening labour market competitiveness and resilience.
Skills-led workforce planning takes centre stage
Beyond wages, workforce planning is being reinforced through skills alignment. Malaysia’s rankings in the IMD World Talent and Competitiveness indices improved in 2025, which the Government attributes partly to more demand-driven workforce planning.
Through MyMahir, the MyMahir Future Skills Talent Council brings industry players together across 18 priority sectors to ensure training reflects actual hiring needs. Targeted interventions under MyMahir SkillsLab focus on closing specific skills gaps, with some participants securing starting salaries of up to RM7,500.
From brain drain to brain circulation
Rather than framing overseas work purely as a loss, KESUMA said Malaysia’s talent strategy continues to "emphasise brain circulation."
Initiatives such as Malaysia @ Heart (MyHeart) aim to maintain connections with Malaysians abroad, while regional efforts such as the Johor-Singapore Special Economic Zone are positioned to support high-skilled job creation and structured cross-border talent flows. TalentCorp reiterated that foreign talent is intended to complement, not replace, local workforce development.
Labour reform and digitalisation top the 2026 agenda
Alongside talent measures, KESUMA’s 2026 New Year’s address set out a broader labour reform agenda.
Key priorities include rolling out the National Human Resources Policy (DSMN) 2026-2030, reforming 26 labour laws, and accelerating the digitalisation of services such as the Labour Court and the SOCSO system to improve efficiency and transparency.
Stronger worker protection and industrial harmony
Worker protection remains central to the Ministry’s plans. Measures include a review of the Minimum Wage Order, expanded implementation of the SOCSO 24-Hour Protection Scheme, and efforts to strengthen enterprise harmony through the National Industrial Harmony Index.
KESUMA also plans to reinforce the role of trade unions and occupational safety and health frameworks.
Scaling up skills and TVET pathways
Skills development will continue to be driven through TVET, with a target of building a 35% skilled workforce by 2030.
This includes expanded targeted training programmes, an additional RM100mn PTPK allocation for e-hailing and p-hailing gig workers, and ongoing efforts to strengthen the national talent pipeline through initiatives such as the TalentCorp LIKES Grant and High Growth High Value economic sectors.
Looking back at 2025 outcomes
Reflecting on 2025, the Minister highlighted the full implementation of the RM1,700 minimum wage, benefiting more than 4.4 million workers, and the enactment of the Gig Workers Act 2025, which extended protection to 1.2 million gig workers.
The SOCSO 24-Hour Protection Scheme now covers 9.6mn contributors, while Malaysia’s unemployment rate has fallen to 2.9%, the lowest level in 11 years, with more than 100,000 new jobs created.
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