Malaysia weighs raising retirement age to 65 while safeguarding youth employment

Malaysia is considering raising the national retirement age from 60 to 65 as part of broader labour reforms aimed at addressing the country’s transition into an ageing society, while ensuring younger employees continue to have fair access to employment opportunities.

Human Resources Minister Steven Sim told parliament that the ministry is reviewing proposals under the 13th Malaysia Plan, including amendments to the Minimum Retirement Age Act 2012 and new legislation on re-employment with more flexible terms for older employees. The move is intended to help productive senior employees remain in the labour market while meeting the nation’s evolving workforce needs.

He said the transition to becoming an ageing society requires immediate adjustments in the labour market, and added, “In this regard, efforts to increase the participation of older employees in the labour force will be intensified as part of initiatives to improve the labour market.”

At present, the Minimum Retirement Age Act sets 60 as the mandatory minimum, but employers are not prohibited from hiring or retaining employees beyond that age. Sim noted that any policy changes will be developed carefully, balancing the benefits of retaining experienced employees with the importance of creating pathways for younger talent.

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Several considerations will shape the review, including rising life expectancy among Malaysians, the health and productivity of older employees, national labour demand, and the youth unemployment rate. “The main focus is to maintain a balance between retaining experienced employees and providing opportunities for the younger generation to secure jobs suited to their qualifications,” Sim explained in a written reply, reported New Straits Times.

Beyond retirement, the ministry is also examining wider labour law reforms covering 28 statutes under its purview. Among these is a review of the minimum wage system. Defending the inclusion of foreign employees, Sim stressed that wage protections must apply equally to all employees. Suppressing wages for migrant employees, he warned, would depress overall wage benchmarks, creating downward pressure on local salaries as well.

“The foundation of this issue is not merely about the International Legal Organisation or the law; it is about doing what is right. This is a matter of human rights,” Sim said. “When foreign employees’ wages are suppressed, the overall labour market wage benchmark will also be pushed downwards. Employers would prioritise hiring foreign employees, and eventually, local employees’ wages would be dragged down too.”