While Layoffs Rise, Some Malaysian Companies Struggle To Keep Workers Past 90 Days

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Malaysia's rising job losses have dominated headlines in recent weeks, but some employers say a different problem is emerging, where workers are leaving too quickly

Data from the Social Security Organisation (PERKESO) shows that 24,100 workers were retrenched in the first quarter of 2026, with layoffs concentrated in manufacturing and other export-driven sectors.

At the same time, companies in high-volume service roles report ongoing difficulty retaining new hires, particularly within the first few months of employment.

Early attrition remains a weakly tracked issue

Industry-wide data on early attrition is limited, but employers say it is a persistent challenge in fast-paced service environments where hiring cycles are short, and turnover can be high.

Business process outsourcing firm Daythree said the first 90 days remain the most critical period for retention.

"Early attrition remains one of the most critical points of focus, particularly within the first 90 days when new hires are still building confidence and aligning expectations," the company said.

It added that attrition at this stage is often linked less to the role itself and more to a mismatch between expectations and actual job experience.

Demand for certain roles is still holding up

Despite the rise in retrenchments, demand for roles in customer experience, digital operations and AI-related functions remains steady.

Daythree said it has not observed a disproportionate influx of applicants from any single retrenchment-hit sector, but noted broader interest from individuals seeking more stable and structured career pathways.

The company added that roles in customer-facing operations have evolved, with employees increasingly expected to work alongside automated systems and handle more complex, multi-channel tasks.

As a result, hiring priorities are shifting towards adaptability and the ability to learn, rather than fixed technical skillsets.

Cost pressures are part of a broader mix

Rising living costs are also influencing employment decisions.

Malaysia's inflation rose to 1.7% in March, up from 1.4% in February, driven largely by higher transport costs, while recent fuel price increases have pushed up day-to-day expenses.

Daythree said these pressures are becoming more visible, particularly among workers in high-volume roles, though they are rarely the sole reason for employees leaving.

Other factors, including career progression, role clarity and overall work experience, continue to play a significant role.

Onboarding is seen as a key pressure point

Employers increasingly view the early stages of employment as a key determinant of whether workers stay.

"When expectations are unclear, or support is inconsistent, disengagement can set in early," the company said.

Daythree said its internal data shows early attrition rates in the low single-digit range, with a target of keeping it below 5%. It also reported a reduction in attrition within the first six months following changes to onboarding and early-stage support.

These include structured check-ins, clearer role expectations and more consistent engagement during the first 90 days.

The labour market is showing mixed signals

The coexistence of rising layoffs and ongoing retention challenges points to a more uneven labour market.

While sectors such as manufacturing continue to shed jobs, parts of the services economy are still hiring, but facing churn instead of shortages.

Daythree said companies may need to rethink how they approach hiring in this environment, focusing more on what happens after recruitment rather than the hiring process alone.

As Malaysia enters what Economy Minister Akmal Nasrullah Mohd Nasir has described as a "crucial period" for the labour market, the challenge may not only be about creating jobs, but ensuring workers remain in them.