Malaysia’s labour market is set to remain on solid ground in 2025, anchored by resilient domestic demand, government-led job creation, and a revitalised tourism sector.

Despite the ebb and flow of global economic tides, the country’s workforce appears poised to weather uncertainties and sustain its momentum.

Investment-driven employment growth

According to an analysis by Hong Leong Investment Bank (HLIB Research), the realisation of approved investments will be a key pillar of employment growth, reinforcing household spending and economic activity.

Data from the Ministry of Investment, Trade and Industry (MITI) underscores this optimism: 98.4% of investment projects initiated between 2021 and March 2024 have either been completed, are currently in progress, or are in the pipeline.

This strong follow-through serves as the bedrock for job creation, ensuring that employment opportunities continue to sprout across multiple industries.

Labour market data paints a steadying picture, with unemployment falling to 3.3% in 2024, compared to 3.4% a year prior.

Notably, the duration of unemployment has seen a marked shift – fewer individuals are jobless for extended periods, with the majority securing new roles within three months.

This suggests a labour market that is not just recovering but also more efficient in absorbing talent, thanks to increased hiring activity across key industries.

Also Read: Wages on the rise as labour market gains ground

The engines driving employment expansion

Employment rates have continued their upward climb, with notable gains across the services, manufacturing, construction, and agriculture sectors.

Within services, wholesale and retail trade, transportation and storage, and information and communication have emerged as star performers, propelling workforce expansion.

In the fourth quarter of 2024, the labour force swelled by 0.4% to 17.34 million, while employment grew by 0.5% to 16.79 million.

Regional job markets mirrored this trend, with states such as Selangor, Kedah, Melaka, Johor, and Pulau Pinang posting low unemployment rates, underscoring robust local economic activity.

Selangor led the charge with the highest labour force participation rate at 76.4%, followed closely by Kuala Lumpur and Pulau Pinang – both vibrant economic hubs with deep workforce engagement.

Sector-wise, job gains were most pronounced in services, particularly in wholesale and retail trade, entertainment, and food and beverage services.

While manufacturing and construction continued their steady ascent, the mining and quarrying sector registered a marginal contraction.

Agriculture – a longstanding cornerstone of Malaysia’s economy – is projected to expand its labour force by 5.98%, while manufacturing is set to grow by 2.69%.

The self-employed segment remains a significant player, with approximately 5.93 million workers charting their own course in the economy.

Economic resilience: Keeping inflation in check and jobs on track

Looking ahead, Malaysia’s economic landscape remains promising, with inflation expected to stabilise between 2.0% and 3.5%, aided by effective price control measures.

Growth in key sectors, particularly electrical and electronics manufacturing and tourism-related industries, is expected to fuel job creation, keeping the labour market buoyant.

Also Read: Malaysia to expand wage increase policy to benefit thousands of workers

However, external headwinds persist. The ongoing trade tensions between the United States and China could cast a shadow over global supply chains, posing challenges for Malaysia’s export-driven industries.

Yet, the construction and agriculture sectors are poised to serve as stabilising forces, acting as economic shock absorbers that keep employment expansion on an even keel.

A labour market marching forward

As Malaysia steps into 2025, its labour market appears to be on firm footing, balancing steady job growth with economic resilience.

While global uncertainties may test its resolve, the country’s workforce is not just standing its ground. It is moving forward, adapting to new realities and capitalising on opportunities.

With strong policy support, industry expansion, and a nimble workforce, Malaysia’s employment landscape is not merely holding steady – it is evolving for the future.