SHAH ALAM — Malaysians should realistically expect a more fragmented and flexible job market in 2026, rather than a uniformly tight or weak one.
Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman said traditional, low-value-added roles are likely to remain selective and tighter as automation, digitalisation and cost rationalisation replace routine tasks.
He said employers, facing higher operating costs and global economic uncertainty, will be cautious about permanent headcount expansion and more disciplined in wage growth.
"The job market will become more flexible with greater reliance on contract-based and project-based employment, hybrid and remote work arrangements, skills-based hiring rather than purely qualification-based recruitment.
"This reflects employers’ need to stay agile in response to volatile demand, while still accessing specialised talent when needed," he told Sinar Daily.
He said the most defining feature will be fragmentation as opportunities will not be evenly distributed across sectors, locations, or skill levels.
He added that growth is expected in digital services, green and sustainability-related industries, advanced manufacturing, healthcare, logistics and selected professional services, while sectors heavily dependent on low-skilled labour or narrow domestic demand may see slower job creation.
"This means that the 2026 labour market will reward adaptability, continuous skills upgrading and mobility, rather than long-term reliance on a single employer or role.
"For employees, job security will increasingly come from employability. For employers, the challenge is to balance flexibility with fair employment practices and talent development to sustain a stable workforce," he said.
Job creation, he said will be uneven across sectors, influenced by cost pressures, technological adoption, regional demand and policy direction.
He said key growth areas include:
Digital and technology-enabled services – Roles in data analytics, artificial intelligence deployment, cybersecurity, software development, digital marketing and IT support.
Green economy and sustainability-related activities – Renewable energy, energy efficiency, environmental management, Environmental, Social and Governance reporting as well as sustainable manufacturing.
Advanced manufacturing and electrical and electronics – Increasingly requiring technical skills.
Healthcare and care economy – Supported by ageing demographics, rising health awareness and private sector expansion.
Logistics, supply chain, and selected services – Driven by e-commerce growth, regional trade and supply chain diversification.
Conversely, he said sectors that relied heavily on low-skilled labour and faced rising wage, compliance and operational costs were likely to experience restructuring.
He said repetitive roles, whether manual or clerical, will be increasingly automated. He emphasised that the key challenge was not shortage of jobs, but a mismatch between skills available and emerging demand.
He said proactive reskilling, stronger industry–education collaboration, targeted small and medium enterprises support as well as responsible workforce planning were critical.
Syed Hussain said while entrepreneurship can offer alternatives for displaced workers, it is not risk-free.
He said challenges included underestimating capital needs, cash-flow issues, competition and gaps in business management skills.
While entrepreneurship can be part of the solution for workers affected by layoffs, he said it should not be viewed as an automatic safety net.
"Self-employment often lacks social security, insurance and income protection.
"Entrepreneurship works best when entered by choice, with access to training, mentoring and financing and ideally while maintaining alternative income streams." he said.
He added that pre-retrenchment reskilling, redeployment, transitional support and balanced messaging about self-employment’s potential were essential.
He said rising urban living costs meant Malaysians may need to reassess the traditional city work model.
"Urban centres remain key for high-value industries, corporate headquarters and specialised services, but escalating costs of housing, transport, childcare and daily necessities erode real income gains.
"Digital connectivity and economic activity spreading beyond cities make non-urban livelihoods increasingly feasible, though job diversity and career progression may be more limited in certain regions. Some high-skill or specialised roles still require physical presence in urban hubs," he said.
Meanwhile, former Malaysian Trades Union Congress president Datuk Abdullah Sani Abdul Hamid said retrenchments, if they occur, should not automatically be seen as the end of the road for workers, but as a point where preparation and support become critical.
He said entrepreneurship can be a viable alternative for workers affected by job losses, provided they are properly prepared and supported, noting that retrenchments are often closely tied to investment flows and broader economic conditions.
"Agencies are already in place to support affected workers through entrepreneurial pathways.
"Cities still offer more employment opportunities than rural areas, which explains why many continue to migrate.
"This is also why agriculture must be strengthened as an attractive option for younger generations," he said.
He added that encouraging people to remain in rural areas requires stronger policy direction, ensuring that sustainable job opportunities exist outside cities.