He said strong employment figures hid growing concerns over wages, productivity, and skills-related underemployment, even as Malaysia’s unemployment fell to its lowest level since 2014, while labour force participation reached a record high of 70.9%.
Dornan said the economy grew by more than 5% last year, making the labour market appear healthier than it had been in more than a decade.
However, he said many tertiary-educated Malaysians were still working in jobs below their qualification levels because the economy was not creating enough high-skilled jobs.
He gave the example of tertiary-educated workers in Kelantan, 52.3% of whom he said were employed in lower-skilled roles, while the national rate for skills-related underemployment stood at about 36%.
“These people did the right thing. They studied, applied themselves, graduated, and entered the labour market, but the economy isn’t generating enough high-skilled jobs to absorb them.
“The question is no longer whether Malaysians have jobs, it’s whether those jobs are productive enough and well-matched to worker skills or capabilities,” he said at the launch of the World Bank’s 32nd Malaysia Economic Monitor report here today.
Dornan said real wages had increased between 2010 and 2024, but that rising living costs and slower productivity growth had also limited broader income gains.
He said productivity per worker had increased by around 30% since 2010 compared with wage growth of about 43%, raising concerns about whether productivity growth could sustainably support future wage increases.
“Jobs are the primary channel through which economic growth translates into higher living standards,” he said.
Dornan also said Malaysia’s most productive firms paid workers three times more than average firms but were not expanding fast enough to absorb more workers into high-skilled and better-paying jobs.
Malaysia’s unemployment rate remained at 2.9% in March 2026, its lowest level since November 2014, according to the statistics department. Total employment rose to 16.80 million amid growth in the services, manufacturing, and construction sectors.