13MP: Labour Market Reforms To Create More Dynamic, Competitive And Sustainable Ecosystem

KUALA LUMPUR, July 31 (Bernama) -- The 13th Malaysia Plan (13MP) for the period 2026 to 2030 introduces comprehensive labour market reforms to create a more dynamic, competitive and sustainable employment ecosystem.

According to the 13MP document released by the Ministry of Economy today, the reforms are in line with the aspirations of the MADANI Economy with the main focus on increasing the participation of local workers in highly skilled jobs with competitive salaries while reducing dependence on foreign workers.

The document states that the government targets a significant reduction in foreign workers to 10 per cent of the total workforce by 2030, and further to five per cent by 2035.

"In this regard, the government will implement the Multi-Tier Levy Mechanism (MTLM) starting 2026 which imposes different levy rates based on the level of sector dependence on foreign workers and the proceeds are channeled into the Trust Fund to promote automation and mechanisation," the document said.

The conditions for issuing Temporary Work Visit Passes will also be tightened, including eligibility criteria for changing employers and sectors, barriers to doing business and setting a shorter working year limit.

In line with this, local workforce participation will be enhanced through programmes such as the Academy in Industry (ADI), with priority given to matching jobs to local participants before approving the hiring of foreign workers.

"Foreign worker applications will be required to go through a clearinghouse that will be established to facilitate the matching of ADI programme participants first before approval. This measure will ensure that local workers are given priority to fill vacant positions," according to the document.

In terms of providing accommodation facilities, the document states the importance of providing comfortable facilities close to the workplace as an important factor in attracting local workers.

"Various initiatives will be introduced to encourage employers to provide adequate accommodation facilities, while related acts and regulations will be reviewed to ensure the welfare and safety of workers are guaranteed," according to the document.

The labour market reform also places emphasis on the overall harmonisation of the wage system through the empowerment of the National Wage Consultative Council and the implementation of periodic reviews of the minimum wage based on the concept of a living wage.

"The role of this council will be expanded to include setting the starting salary of graduates including Technical and Vocational Education and Training (TVET) graduates, as well as regulating the implementation of the Progressive Wage Policy (PWP)," according to the document.

To improve the well-being of workers, the government will explore new mechanisms to guarantee continuous income after retirement through the separation of Employees Provident Fund (EPF) contributions into two main components, namely retirement savings and monthly pensions.

"Other initiatives include the drafting of specific legislation for gig workers to guarantee their welfare including the right to work in a safe, healthy and conducive environment as well as improving protection from occupational disasters covering accidents outside working hours and not related to work," according to the document.

Based on the document, the achievements of the 12th RMK showed, among others, that the country's labour market has improved with the unemployment rate decreasing to 3.2 per cent in 2024, compared to 4.5 per cent in 2020.

The composition of skilled workers has increased from 29.6 per cent in 2020 to 30.2 per cent in 2024 and the full implementation of the PWP which began in early 2025 with a target participation of 50,000 workers.

"Efforts to improve workers' salaries have successfully increased the monthly median salary and wage to RM2,602 in 2023, from RM2,076 in 2020," according to the document.

Other achievements of the 12th RMK include the registration of 20,088 participants for the ADI programme until 2024 while the skills upskilling and reskilling programme under Pembangunan Sumber Manusia Berhad successfully trained 3,886,470 workers from 2021 to last year.

-- BERNAMA