In the recent news, Deputy Economy Minister, Hanifah Hajar Taib told the Dewan Rakyat that a lack of skills and a mismatch with labour market needs are among the key factors driving people into poverty.
The nation faces an increasingly urgent challenge; a widening skill mismatch between what graduates bring to the labour market and what employers truly need.
Despite rising enrolment in higher education and steady economic growth, too many Malaysians are still unable to secure roles that match their qualifications or the demands of a rapidly transforming economy.
Recent DOSM data shows that more than one in three Malaysian graduates are employed in fields unrelated to their studies. The Digital Education Council’s ‘AI in the Workplace 2025’ report further reveals that only 3% of employers feel universities are preparing graduates for an AI-driven future.
Industries such as digital technology, advanced manufacturing, cybersecurity, and renewable energy continue to struggle to find talent with the right skills, an issue made worse by rapid advances in automation, AI and green technologies.
This is not simply a matter of graduates lacking “experience.” Rather, it reflects a deeper misalignment between curriculum cycles; which often take years to revise and industry needs, which change within months.
The World Economic Forum estimates that 60 per cent of jobs in Southeast Asia will soon require moderate to advanced digital skills, yet only a fraction of graduates possess these capabilities. Malaysia risks falling behind if its universities and training institutions do not accelerate reform.
To respond effectively, higher education must embrace a new model—one that is agile, future-focused and deeply connected to industry. Around the world, leaders in tertiary education are shifting from a degree-centric approach to a skills-first ecosystem. At the centre of this movement are innovations such as the industry-recognised certificates, alternative credentials and stackable degrees.
Industry certificates, such as those offered by AWS, Google, Microsoft, Siemens, Autodesk and Cisco, have become the new currency of employability. These credentials are trusted by global employers because they demonstrate mastery of specific tools and competencies.
In the United States, universities such as Purdue, Arizona State University and Northeastern University have begun embedding industry-recognised certifications and stackable credentials into their academic programmes. Many students graduate not only with a degree but also with one or more additional credentials that enhance their career prospects.
Malaysia is slowly moving in the same direction. The Malaysian Qualifications Agency (MQA) has introduced the Stand-Alone Micro-Credential Framework, and HRD Corp has expanded funding for industry-aligned upskilling programmes. However, integration is still inconsistent across campuses.
If Malaysia wants to bridge the skill gap and remain competitive in sectors like AI, green energy, robotics, fintech and advanced manufacturing embedded industry certifications must become mainstream.
Equally important is the shift toward stackable degrees, where learners accumulate microcredentials and short courses that build progressively toward formal qualifications. This model supports lifelong learning, allowing working adults to upskill without pausing their careers.
A person may start with a Google Career Certificate, convert it into university credits via microcredentials, and eventually progress into a diploma or bachelor’s programme. Such flexible pathways give Malaysians the autonomy to learn at their own pace while still meeting industry expectations.
Beyond curriculum design, stronger university–industry partnerships are essential. Employers should play a direct role in shaping learning outcomes, designing assessments and offering real-world projects that expose students to current technologies and workplace standards. This form of co-developed curriculum ensures that academic programmes stay relevant and graduates are job-ready from day one.
Malaysia is at an important inflection point. The government’s major policy initiatives such as the National Energy Transition Roadmap (NETR), Hydrogen Economy Blueprint and Digital Economy Plan, require a future workforce with advanced digital, engineering and sustainability competencies. Yet without significant reform in higher education, the country may struggle to supply this talent.
The time has come to adopt a life-long skills passport approach, where Malaysians hold a portable record of verified competencies that can be shared across employers, institutions and borders. The European Union and the United States are already moving toward such systems. With MyDigital ID, upgraded employment profiling through MyFutureJobs and HRD Corp’s national upskilling ecosystem, Malaysia is well-positioned to follow suit.
If Malaysia is to succeed in its transition to a high-income, innovation-led economy, it must rethink what it means to be “qualified.” Degrees will remain important, but they must be complemented by industry credentials, modular learning pathways and flexible, learner-centred designs.
Solving the skill mismatch is not just an education issue. It is an economic imperative. The future of Malaysia’s workforce depends on its ability to continuously learn, unlearn and relearn, powered by a higher education system that is responsive, relevant and resilient.
Dr Hanim Salleh is a Professor at the Universiti Tenaga Nasional and a Fulbright Visiting Scholar at the Institute of Public Policy, George Washington University, USA. Her current work is on Quality of Higher Education, Credentials and Labor Market. She is also the Fellow of the Policy Research IKRAM (KADRI) and Vice President of IKRAM.
