Tighter labor market and rising costs prompt shift toward skills-aligned recruitment

KUALA LUMPUR and PENANG, Malaysia, Jan. 27, 2026 /PRNewswire/ — Reeracoen Malaysia has released its Hiring Trends Year-on-Year Comparison 2024 vs. 2025, showing that while Malaysian employers continued to hire in 2025, recruitment strategies are becoming more selective, disciplined, and aligned with long-term workforce needs. Employers are shifting away from broad recruitment drives toward more selective, skills-aligned hiring that supports long-term workforce sustainability.

The change comes as organisations navigate higher employment costs, ongoing skills mismatches, and tighter labour market conditions. Rather than scaling back hiring, the findings suggest a recalibration—a move toward hiring the right talent at the right time, not simply expanding headcount.

Report overview: Comparing Hiring Patterns Across Two Years

The annual study analyses hiring data across Malaysian industries, comparing actual recruitment outcomes in 2024 with employers’ hiring intentions and behaviours in 2025.

While demand for talent remains strong, employers are moving away from large hiring waves. Instead, they are implementing phased, targeted recruitment plans that prioritise roles essential to productivity and business growth. This shift reflects a broader recognition that talent acquisition is a strategic function, not just an operational task.

Why Employers Are Rethinking Hiring Approaches

The report identifies several key factors driving this shift. Rising labour costs, including wage adjustments under Budget 2025, combined with ongoing skills mismatches, have made each hiring decision more significant. Meanwhile, talent shortages in specialized and technical roles increase the risks and costs associated with hiring errors.

Despite these pressures, overall hiring demand remains stable, with employers focusing resources on roles that directly support productivity and growth.

In response, employers are re-evaluating how, when, and whom they hire. Job readiness, relevant experience, and long-term fit are now taking precedence over volume. Market benchmarking and robust candidate assessments are becoming standard tools in the hiring process.

Yohei Yagi, Country Manager at Reeracoen Malaysia, noted that this evolution is evident across multiple sectors.

“Malaysian employers are still hiring, but they’re doing so with greater precision than in previous years,” Yagi said. “Higher employment costs and ongoing skills gaps mean organisations need to be more deliberate in their hiring decisions. What we are seeing is a shift toward well-defined, skills-aligned hiring rather than broad expansion.”

Why the Report Matters for Employers

The study positions recruitment as a strategic lever that directly influences organisational resilience and competitiveness. The stakes are higher than ever: a single mis-hire can affect productivity, team dynamics, and long-term cost efficiency.

Kenji Naito, Group Chief Executive Officer of Reeracoen Group, said this growing awareness is shaping recruitment across the region.

“Across Asia-Pacific, employers are navigating tighter labour markets and rising workforce costs at the same time,” Naito said. “In Malaysia, this has led to a more disciplined approach to hiring, where accuracy and long-term fit matter more than speed or volume. Recruitment partners play an important role in helping organisations interpret market conditions and make informed, sustainable hiring decisions.”

Reeracoen developed the Hiring Trends Comparison as an annual study to help business leaders and HR professionals respond to shifting market conditions with clarity and confidence. The report provides actionable insights and benchmarks to guide more strategic workforce planning.

For employers, success in 2026 will increasingly depend on the ability to hire the right skills at the right time, supported by accurate market data and informed recruitment strategies.                        

To access the full report and explore Reeracoen Malaysia’s hiring insights and recruitment solutions, please visit: https://www.reeracoen.com.my.

About Reeracoen Malaysia

Reeracoen Malaysia is part of Reeracoen Group, an award-winning leader in Asia’s recruitment landscape, connecting top-tier talent with forward-thinking organisations. With nine offices across six major Asian countries, Reeracoen combines deep local expertise with cross-border hiring capabilities to help businesses grow stronger and faster. We uphold the highest standards of professionalism and service quality, delivering innovative and trusted recruitment solutions that meet the evolving needs of today’s workforce.