For years, retrenchments were often assumed to affect factory workers and lower-skilled employees first.
However, Malaysia’s latest employment data paints a very different picture. More than half of those who lost their jobs in 2026 were professionals, managers, executives and technicians, commonly known as PMET workers.
According to the Social Security Organisation’s Employment Insurance System (PERKESO-EIS), 52,607 workers had applied for unemployment benefits as of July 16, 2026.
This was already equivalent to around 70% of the 74,841 applications recorded throughout 2025, raising concerns that Malaysia could be heading towards its highest annual number of job losses since the COVID-19 pandemic.
Retrenchments Increased By 38% In The First Half Of 2026
The rise in retrenchments was not caused by a single wave of layoffs.
Every month during the first half of 2026 recorded more job losses than the corresponding month in 2025.
Between January and June, 47,053 Malaysians applied for unemployment benefits, compared with 34,005 during the same period last year. This represented an increase of approximately 38% in just one year.
January saw the largest jump, with 10,658 applications compared with 6,275 in January 2025, marking a 70% increase.
By mid-July, the number had climbed further to 52,607 applications. If the current pace continues, Malaysia could record its highest annual number of job losses since 2020.
High-Skilled Workers Lead Retrenchments In Malaysia
What makes the latest figures particularly surprising is the type of employees losing their jobs.
According to Maybank Investment Bank, high-skilled employees accounted for more than half of Malaysia’s retrenchments on average between 2021 and 2025. They remained the largest affected group during the first five months of 2026.
Under the Malaysia Standard Classification of Occupations, high-skilled workers include managers, professionals, technicians and associate professionals.
PERKESO’s latest figures showed that PMET workers represented 51% of those who lost their jobs in 2026.
Professionals formed the largest individual category, with 13,461 cases or 26% of the total. Technicians accounted for 7,104 cases, while managers recorded 6,165 cases.
Together, these three groups represented more than half of all workers who had applied for unemployment benefits by mid-July.
The figures challenge the common assumption that lower-skilled workers are always the first and most vulnerable group during corporate downsizing.
What Is Driving Retrenchments Among Professionals?
Maybank Investment suggested that one possible explanation is the greater likelihood of high-skilled employees participating in voluntary separation schemes, mutual separation schemes or early retirement packages.
Corporate downsizing and business closures were among the main reasons given for the recent retrenchments, particularly in the services and manufacturing sectors.
However, the figures also raise bigger questions about Malaysia’s employment structure.
Economists and policymakers may need to examine whether the country is creating enough new high-skilled positions to replace those being lost. They may also need to determine whether automation and generative artificial intelligence are beginning to displace certain professional roles faster than new opportunities can be created.
There is currently no clear evidence that AI is the main cause. Still, the rapid development of the technology means the possibility should not be ignored.
If knowledge workers are increasingly being replaced by automation, Malaysia may need different retraining programmes and temporary income support compared with those traditionally designed for lower-skilled workers.
Lower-Income Malaysians Are Also Under Pressure
Although high-skilled employees formed the largest occupational group, lower-income Malaysians were far from unaffected.
Nearly 44% of affected workers earned below RM3,000 per month, representing 20,878 people.
The most affected salary range was between RM2,000 and RM2,999, with 11,298 cases. This means almost one in four applicants came from this income group.
These workers may face greater financial pressure after losing their jobs, particularly if they have limited savings or depend on a single source of household income.
The data shows that retrenchments are affecting both white-collar professionals and lower-income workers. However, their financial needs and paths back into employment may be very different.
Kuala Lumpur And Selangor Recorded Almost 60% Of Cases
Malaysia’s main economic centres recorded the highest number of job losses.
Kuala Lumpur accounted for 15,893 cases or 30% of the total, while Selangor recorded 15,228 cases or 29%.
Combined, the two locations represented almost six out of every 10 unemployment benefit applications.
Johor was third with 4,035 cases, followed by Penang with 3,530.
The services sector recorded 36,040 cases, representing 69% of all applications, while manufacturing accounted for 10,260 cases. Construction recorded another 5,403 cases.
Manufacturing was the largest individual industry division affected, followed by wholesale and retail trade.
Malaysia’s Labour Market Remains Resilient For Now
Despite the increase in retrenchments, Malaysia’s broader employment situation has remained relatively stable.
The unemployment rate stood at 2.9% during the first five months of 2026, indicating that the country remained at full employment.
Maybank Investment also noted that many affected workers were being absorbed into new employment. Between January and May, there were approximately 1.5 job placements for every worker retrenched.
The growth of microbusinesses, freelancing and gig economy work has also provided alternative sources of income for those who lost formal employment.
PERKESO’s data further showed that unemployment benefit applications declined by 4% in the second quarter compared with the first quarter. This offers some reassurance that the situation may not be worsening at the same speed.
However, with 52,607 applications already recorded by mid-July, the trend still deserves close attention.
The key question is no longer simply how many Malaysians are losing their jobs. Policymakers must also understand why high-skilled workers are being affected so heavily, whether suitable replacement jobs are available and whether the trend signals a deeper shift in Malaysia’s economy.
Sources: 1| 2| 3
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