The mandatory retirement age in Malaysia is set to be raised from 60 to 65 years, according to the Future Labour Market (EU-ERA). This move is expected to promote financial stability, increase the labor supply, and reduce fiscal pressure on the government.
Malaysia’s aging population
Compared to other countries, such as Japan and Australia, Malaysia’s current mandatory retirement age is relatively low. The elderly population is projected to increase to 14.5% by 2040, making Malaysia an aging nation. Consequently, there will be an increase in the workforce aged 55-64 and a decrease in the young age group of 14 years and below.
The economic factor, particularly financial pressure, is the main contributor to the workforce’s growth despite the mandatory retirement age. Employment service agencies can support the extension of the retirement age by providing suitable jobs, offering skills training, and preventing age discrimination. Regulations and guidelines are also necessary to ensure that elderly workers’ welfare is protected, especially in the service sector where they contribute negatively to productivity.
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