World Bank addresses (mis)perception of higher retirement age limiting jobs for younger workers
KUALA LUMPUR: The perception that increasing the retirement age will restrict job opportunities for younger workers is inaccurate and not supported by economic evidence, a senior World Bank economist said.
World Bank senior economist for social protection and jobs for East Asia and Pacific region Dr Matthew Dornan said this stems from the misconception that the number of jobs in an economy is fixed.
"In reality, the number of jobs in an economy is not static. It evolves based on market demand and economic growth," he said at the International Social Wellbeing Conference 2025 by the Employees' Provident Fund (EPF) here today.
Dornan said studies have shown older workers remaining in the labour market do not significantly reduce overall job opportunities for younger individuals.
Elaborating further, he noted that the presence of older workers in the workforce can have a multiplier effect on job creation.
"When older workers remain employed, they have income to spend, and this spending drives demand for goods and services often provided by younger workers," he said.
The chain reaction, he added, stimulates economic activity, ultimately leading to the creation of more job opportunities across various sectors.
On proposals to raise the retirement age, Dornan said such measures might become necessary in the future to ensure the nation's economic stability, particularly as the population continues to age.
He highlighted that many countries have already adopted similar approaches, establishing a retirement age of around 65 years as the new norm.
However, he said any decision on retirement age must be made with careful consideration and tailored to Malaysia's specific context and needs.
"Typically, countries implement retirement age increases gradually to avoid system shocks and ensure smooth transitions," he said.
Dornan recommended that Malaysia evaluate structural labour market factors, fiscal sustainability and citizens' life expectancy before making decisions related to retirement age policies.
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