DECEMBER 31 — Despite strong gains in female education, persistent gaps in care infrastructure and workforce design continue to push women out of formal employment, with long-term consequences for productivity, governance and Malaysia’s sustainability ambitions.
Malaysia’s sustainability conversation has matured. Boardrooms now debate climate exposure, transition risk and sustainability disclosures with increasing fluency. As Bursa Malaysia strengthens sustainability reporting expectations and global investors align with IFRS-linked sustainability standards, attention has shifted beyond environmental metrics to a deeper evaluation of governance quality and long-term business durability.
However, one material risk remains persistently under-examined: the systematic loss of women from the workforce during their prime productive years. This is no longer a marginal diversity issue. For boards, policymakers and investors, women’s workforce participation must be recognised as a material human capital and productivity risk with direct implications for enterprise value, competitiveness and sustainable growth.
Malaysia produces a substantial pool of highly educated women. Data from the Ministry of Higher Education in 2024 show that women account for more than 60 per cent of enrolment in public universities; and in several disciplines, they outnumber men.
From an accounting perspective, this reflects sustained public and private investment in human capital formation. However, the economic return on this investment weakens sharply once women enter mid-career. Department of Statistics Malaysia figures in 2022 indicate that the female labour force participation rate remains around 56 per cent, compared with more than 80 per cent for men, and below the national target of 60 per cent. The gap widens most visibly for women in their 30s and 40s, precisely when experience, firm-specific knowledge and leadership potential are most valuable.
From an investor’s perspective, this pattern signals structural inefficiency. Firms repeatedly incur recruitment, onboarding and training costs to replace talent they already possess. These costs are rarely disclosed explicitly, yet they accumulate over time, reducing margins and weakening operational continuity. In substance, this represents human capital depreciation that remains largely invisible in financial statements, but materially affects future cash flows.
The underlying driver is not a lack of ambition or capability among women. It is the absence of enabling systems. Malaysia’s care economy, encompassing childcare, eldercare and unpaid caregiving support, remains underdeveloped relative to the country’s aspirations as a high-income economy. Labour force surveys consistently show that caregiving responsibilities continue to fall disproportionately on women, making workforce exit a rational response to institutional design rather than individual preference.
For boards, this raises governance and risk oversight concerns. A workforce model that consistently loses experienced employees mid-career undermines succession planning, leadership development and organisational resilience.
While Malaysia has made progress at board level, with women now holding over 30 per cent of board seats among large listed companies following regulatory targets, the pipeline below board level remains fragile. Without sustained participation at managerial and senior executive levels, board diversity gains risk becoming symbolic rather than structural.
This issue is increasingly relevant in the context of sustainability reporting. Under IFRS S1 and IFRS S2, companies are required to disclose material sustainability-related risks and opportunities that could reasonably affect enterprise value. Workforce stability, talent retention and human capital capability clearly fall within this scope, particularly under the social and governance dimensions of ESG.
Nevertheless, current ESG disclosures in Malaysia remain uneven. Many sustainability reports emphasise environmental metrics with increasing precision, while social indicators are often presented at a high level. Gender diversity is commonly disclosed as a snapshot headcount figure, with limited information on retention after maternity, promotion rates, pay equity progression or structured re-entry pathways. From an investor standpoint, such disclosures offer limited insight into workforce sustainability risk.
This gap matters. Institutional investors increasingly recognise that workforce instability translates into financial risk. High turnover disrupts operations, weakens institutional memory and increases execution risk during periods of transformation. In sectors already facing skills shortages, the cost of replacing experienced talent is rising. Boards that treat gender inclusion as a compliance exercise rather than a strategic lever risk mispricing future performance.
There is also a tendency to frame women’s entrepreneurship as a convenient solution. Malaysia has a vibrant micro-enterprise ecosystem, with women well represented among informal and self-employed workers. However, entrepreneurship should not be mistaken for a systemic fix. Many women move into micro-businesses because formal employment lacks flexibility and support. From a sustainability and policy perspective, widespread informality raises concerns about income volatility, limited social protection and long-term financial insecurity, all of which carry broader macroeconomic implications.
Malaysia now faces a defining moment. Unlike some developed economies where gender inclusion debates have become polarised, Malaysia’s discourse remains largely pragmatic and growth-oriented. This presents an opportunity for policymakers, boards and employers to act before workforce attrition becomes entrenched.
For boards, the implication is clear. Human capital strategy must be elevated to the same level of scrutiny as climate strategy. This includes recognising care infrastructure as productivity-enabling investment, embedding flexible work as a retention mechanism rather than a concession and demanding workforce disclosures that are decision-useful and aligned with IFRS-linked sustainability standards.
For investors, this is a call to ask sharper questions. How does the company retain experienced women during mid-career stages? What are the long-term costs of attrition? Are workforce disclosures sufficiently granular to assess sustainability risk? These questions go directly to value preservation and sustainable returns.
Sustainable growth is fundamentally built on people and systems that allow people to contribute consistently over their working lives. An economy that educates women well, but fails to keep them in the workforce is leaving productivity, long-term competitiveness and governance quality on the table. For Malaysia, treating women’s workforce participation as a material sustainability issue is not merely progressive. It is prudent, strategic and increasingly unavoidable.
* Dalilawati Zainal is a senior lecturer at the Department of Accounting, Faculty of Business and Economics, Universiti Malaya, and may be reached at [email protected]
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
