Economists warned that Malaysia’s labour market could face “severe challenges” as the national birth rate plunged to an all-time low.
The Department of Statistics Malaysia (DOSM) reported that only 93,500 live births were recorded in the first quarter of 2025, an 11.5% drop from 105,613 in the same period last year and the lowest on record, The Star reported.
This continues a years-long decline, with live births falling from 537,853 in 2000 to 455,761 in 2023, signalling that Malaysia is undergoing a major demographic shift.
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States, ethnicity all observed birth rate decline
DOSM noted that most Malaysian states recorded lower fertility rates (TFRs), with Penang and Kuala Lumpur the lowest at just 1.2 children per woman, as cited by Malay Mail.
Only three states — Terengganu (2.9), Kelantan (2.7) and Pahang (2.1) — remained at or above the replacement level of 2.1 children per woman.
Similarly, the TFR for all major ethnic groups declined, with the Chinese community recording the lowest at just 0.8. Only the Malay community reached the replacement level at 2.1.
DOSM also projected the national TFR will slip further, from 1.67 in 2025 to 1.66 in 2035, well below replacement level.
Many delay starting families amid rising costs
Associate Professor Dr. Tey Nai Peng from Universiti Malaya’s Faculty of Business and Economics said the decline stems from many young Malaysians delaying starting families due to the rising cost of living.
He noted that job insecurity, irregular incomes for the self-employed and the high cost of raising children discourage many from settling down.
Beyond expenses, Tey said changing perceptions and lifestyle choices have also contributed to the decline, as more people embrace individualism.
Labour market may face ‘severe challenges’
Tey warned that if the downward trend continues, Malaysia will face labour shortages in the next 10 to 15 years, particularly in key industries, and will be forced to rely more heavily on foreign workers.
“With a shrinking working-age population, the demand for workers in critical sectors such as healthcare, eldercare, manufacturing and agriculture will intensify, leading to an even greater reliance on foreign labour,” he said, as quoted by the New Straits Times.
He added that this imbalance could weaken intergenerational structures, increasing financial and social burdens on the shrinking working population, including rising healthcare and pension costs.
Calls to introduce family-centred reforms, policies
To address this issue, Tey urged the government to introduce policies that encourage young adults to start families, such as healthcare subsidies, family support programmes and benefits similar to those for older adults.
However, he stressed that financial aid and regulations alone will not suffice, calling for stronger family support systems, gender-equal policies and initiatives to promote work-life balance.
Tey also emphasised the need to increase parental leave, provide childcare support, promote flexible work arrangements and introduce tax relief for families, following models in several European countries.
Govt pledges to reverse declining birth trends
In response, Finance Minister II Datuk Seri Amir Hamzah Azizan vowed that the government would collaborate with relevant ministries to address the issue and introduce regulations that would help combat declining birth and fertility rates.
“To reverse the birth trend, it will take significant effort…we will consider proposals from the relevant ministries. Engagements for the budget are also ongoing and I will look into this matter when the time comes,” he said, as quoted by the Malaysia Edge.
Malaysia is projected to become an “aged nation” by 2048, when people aged 65 and above are expected to make up 14% of the population underscoring the urgency of the challenge.
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