The government will unlock up to RM2 billion from the Human Resources Development (HRD) levy beginning 1 September 2025. This move allows employers to use their levy contributions to pay graduate salaries, marking a significant shift in how the funds can be utilised.

Previously, HRD levy funds were restricted to training-related expenses. Under the new policy, employers will now be able to apply the funds directly to the hiring of Malaysian graduates, including those from public universities and Technical and Vocational Education and Training (TVET) institutions.

Aimed at Boosting Employment and Addressing Brain Drain

Human Resources Minister Steven Sim Chee Keong announced the initiative during the Federation of Malaysian Manufacturing’s 57th annual dinner. He emphasised that the new measure is not only about reducing business costs, but also about creating employment pathways for local graduates.

Malaysia continues to produce a large number of graduates each year, but many face challenges in securing jobs that match their qualifications. Government data indicates that nearly 20% of fresh graduates are unemployed or underemployed within their first year in the workforce. Youth unemployment also remains high, with those aged 15 to 24 facing a rate of 10.3% as of April 2025. 

Sim also highlighted the importance of investing in talent retention as Malaysia advances in technology adoption. He cautioned that sidelining human capital could increase brain drain and weaken the foundation needed for sustainable growth.

Employers Encouraged to Adopt Progressive Workplace Practices

Beyond hiring, the minister encouraged companies to create work environments that better align with the expectations of younger workers. Citing recent surveys, he noted that 40% of Malaysian employees value job flexibility equally to salary, while another 40% prioritise work-life balance.

“These are not luxuries anymore. They are expectations,” he said, adding that organisations with more progressive human capital strategies are better positioned to retain top local talent.

Part of Broader Strategy Under Madani Economy Framework

The RM2 billion release is part of the government’s broader Madani economic strategy, which includes a target of creating 1.2 million high-skilled jobs by 2030. The strategy supports Malaysia’s transition to a technology- and AI-driven economy.

Sim reaffirmed the government’s commitment to working alongside the private sector to achieve these goals, noting that the measure is intended to help both employers and graduates thrive in a competitive job market.

FMM Announces Rebrand to Reflect Broader Industry Role

The event also marked the rebranding of the Federation of Malaysian Manufacturers, now renamed the Federation of Malaysian Manufacturing. The updated name reflects an expanded mandate to represent the entire manufacturing value chain, including services and sectors supporting industrial growth.

Follow us on our official WhatsApp channel for the latest money tips and updates.

• TAGS:
• Employment
• HRD
• Human Resources Development (HRD)