Country Overview: Malaysia’s hiring landscape amid digital growth and talent competition

AI and automation continued to dominate conversations in Malaysia in 2025, shaping every aspect of the business landscape from labour demand to economic policy.

“Malaysia is closing out 2025 with a low unemployment rate of approximately 3%, indicating high labour demand even as policymakers and analysts were wary about job displacement risk from automation. However, hiring demand was acute in certain digital and technical domains as the growth of the digital economy intensified demand for niche skills,” states Gan Hua Choon, Country Manager at Robert Walters Malaysia.

This demand arose from Malaysia’s growth as a data centre and AI infrastructure hub. Large public and private investments went towards grid upgrades, and data centre and energy sector projects increased the need for specialised talent. Even outside of these industries, there were talent shortages in digital, AI, cybersecurity and specialised engineering roles. As a result, employers allocated more budget to talent retention and targeted salary increments.

New rules around AI chip movement and exports also played out in supply chains and local markets. Businesses had to accommodate geopolitical trade controls and subsidy adjustments to determine where to invest and where to place sensitive computing facilities. Certain locations saw increased demand for various skill sets; there was also an uplift across the board in compliance talent.

With so much volatility, businesses tailored their hiring strategies to be more flexible. According to Hua Choon, contract hiring gained momentum over the past year as businesses tapped on skilled contractors, scaling the size of their workforce accordingly to meet workloads and project demands.

Read on to find out more about the labour market and hiring trends for Malaysia in 2026.

Employers focus on learning agility, digital push and contract roles

Existing market trends will become more entrenched and commonplace in 2026, especially as Malaysia’s economic agenda continues to revolve around digitalisation, green growth, and energy transition.

Naturally, hiring markets for the data centre and cloud infrastructure sectors will be particularly active as tech giants press on with local investments. Other sectors that will see strong hiring volumes include renewable energy, solar power, electric vehicle ecosystems, cybersecurity, AI, automation engineering, financial technology and digital banking.

The hiring process itself will take on a greater slant towards skills, especially in digital domains. Hua Choon reveals, “Employers are aware that roles will evolve fast with AI, automation and digital transformation. While they’re after candidates with the right skill sets, they will increasingly look for data literacy, digital fluency and AI-adjacent skills, which are a proxy for candidates’ ability to learn and adapt. More roles will specify the skills that candidates are expected to pick up in the future.”

Contract hiring is also here to stay, especially as Malaysia passed the Gig Worker Bill in 2025, which lays out and institutionalises the rights and protections of part-time, contract, and gig workers. More organisations will adopt this hiring model, while candidates will also explore contract positions with a keener eye on flexibility, salary, and benefits.

The impact of AI in hiring

Recruitment has not been exempted from the growing reach of AI and automation. Ethical frameworks are taking shape, with Malaysian businesses adapting global AI hiring regulations to local needs.

In practice, the technology has been integrated into several workflows. Employers have used AI to match employees to open positions, which boosts internal mobility. Predictive analytics capabilities help forecast attrition and internal mobility, supporting larger hiring plans and strategies. Where external hiring is required, generative AI with Applicant Tracking Systems.

“Employers are aware that roles will evolve fast with AI, automation and digital transformation. While they’re after candidates with the right skill sets, they will increasingly look for data literacy, digital fluency and AI-adjacent skills, which are a proxy for candidates’ ability to learn and adapt.”

Advice for talent attraction and retention

Malaysian employers face an uphill battle with talent attraction and retention – and not merely because of AI. The pace of growth in high-demand sectors has accelerated, yet the local talent pool has not expanded as quickly. Jobs now require candidates with both technical and domain knowledge, but these hybrid candidates are hard to find. Competition for talent is particularly stiff in sectors such as finance, supply chain, cybersecurity, and data analytics.

Furthermore, candidates now want more than just compensation. They now prioritise work-life balance, flexibility, learning, and personal well-being. Younger employees, in particular, seek out companies that convey a sense of purpose and social and environmental responsibility. Therefore, it’s essential for companies to consider how they can offer career growth prospects, mental health support and flexible work arrangements for their employees.

As contract and project-based hiring gains traction, businesses will need to review hiring and workforce management strategies to manifest the strengths of this hiring model. The Gig Workers Bill will formalise contingent workforce models, requiring more oversight to ensure regulatory compliance. Teams will become a more diverse blend of permanent staff, remote freelancers, internal contractors and project-based consultants. “My advice is to consult with trusted experts to craft your strategy for managing a hybrid talent ecosystem,” says Hua Choon.

Lastly, companies should aim to keep up with the latest salary benchmarks and industry insights to maintain a strong footing in hiring and talent retention.

Salaries rise with inflation 

In 2026, wages will rise to keep pace with inflation, with no significant fluctuations expected.

Job movers may see salary increments of 15 – 20%, though roles with niche skills in technology, supply chain, or engineering may see wages rise by up to 30%.

Find out more

Request access to our 2026 Salary Survey to benchmark salaries and to find out more about key hiring trends in Malaysia.