KUCHING: Raising the retirement age for civil servants could solve one problem but create several more, including fewer jobs for young graduates, a heavier wage bill, and slower leadership renewal, said economist Afiza. The Faculty of Economics and Business at Universiti Malaysia Sarawak (UNIMAS) lecturer said Malaysia is undergoing a demographic shift that demands urgent policy responses.
“As of 2024, 8.1 per cent of the population is aged 65 and above. That figure is projected to reach 14.5 per cent by 2040 and exceed 18 per cent by 2060, according to the Department of Statistics Malaysia.
“In this context, the proposal to extend the civil service retirement age from 60 to 65 has sparked a national conversation. While the idea offers some short-term benefits, it raises complex questions about fiscal sustainability, workforce renewal and economic adaptability,” she told Sarawak Tribune.
She noted that one of the main motivations behind the proposal is to ease pressure on the country’s pension system.
She added that civil servants benefit from a non-contributory pension fully funded by the government, and the growing number of retirees has increased the financial burden on public finances. “Delaying retirement may reduce the immediate payout burden and retain skilled staff longer.
However, this measure alone does not solve the underlying structural problem,” she said, adding that pension reform is needed, including a possible shift to contributory or hybrid schemes for new entrants. She stated that financial issues must be viewed alongside employment dynamics.
“Extending the working age could restrict entry-level opportunities for young graduates, in a country already struggling with high youth underemployment. “When senior officers remain in service longer, it can slow promotions and reduce leadership mobility.
“These effects can impact morale, innovation and the longterm attractiveness of the public sector,” she said. Afiza pointed out that not all roles within the civil service are affected equally by age and tenure. She said positions such as policy planning, law, education, medicine and diplomacy benefit from accumulated institutional knowledge and experience, and are harder to replace quickly.
“In contrast, many administrative, clerical and operational jobs are more suitable for younger employees or can be automated.
“A blanket retirement age policy may not account for this variation in job nature and replacement feasibility,” she said.
She added that retirement reform must take into account the rapid technological shift in public service delivery. “As digital systems, automation and artificial intelligence become more common, the civil service may not need to grow in proportion to the population.
“Instead, a smaller, more techsavvy workforce may be more efficient and sustainable.” She said international comparisons offer useful lessons.
“Singapore is gradually increasing its retirement age to 65 and its re-employment age to 70, with a focus on flexible arrangements and continuous upskilling. “France, however, faced widespread protests in 2023 after raising its retirement age from 62 to 64, largely due to a lack of public engagement. “These examples, she said, highlight the need for communication and public support when designing retirement policies,” she said.
She recommended that Malaysia adopt a more flexible and performance-based approach. She added that civil servants in critical fields could be offered optional extensions based on health screening, job performance, and personal willingness.
“Experienced officers could be redeployed into mentorship or advisory roles, allowing knowledge transfer without blocking younger staff. “Roles may also be redefined to allow experienced officers to serve in mentorship or advisory capacities.
“These arrangements help preserve valuable expertise without limiting promotion opportunities for younger staff,” she said.
At the same time, Afiza said stronger investment is needed in leadership development, recruitment and digital literacy for younger employees. “Succession planning should be embedded across the public service to ensure continuity and knowledge transfer between generations.” She also called for reforms to the pension system.
Moving from a fully government-funded model to a partially contributory system would help reduce long-term fiscal risks.
But such reforms, she said, must be gradual and clearly communicated to maintain fairness and public trust. She stressed that lifelong learning and reskilling programmes must be accessible to civil servants of all ages. “This would support older staff who wish to stay productive, while helping younger employees prepare for a changing labour market.” She said retirement reform should also align with Malaysia’s digital agenda. She noted that as automation and artificial intelligence continue to change job structures, many roles may require fewer people or entirely different skill sets, therefore, planning for this shift is crucial.
“For example, digitising records, automating approvals and streamlining services can reduce the need for large support staff.
“By pairing retirement reform with digital transformation, the government can reduce workforce costs while improving service efficiency,” she said.
Having said that, Afiza said that while raising the retirement age may be necessary given Malaysia’s ageing population and fiscal pressures, it must not be treated as a one-size-fits-all fix. “A flexible, sector-sensitive and performance-based approach is more effective. Automation, job suitability and youth employment must be considered in parallel. “With careful planning and inclusive dialogue, Malaysia can build a civil service that is both experienced and forward-looking,” she said.
