Data Highlights

• The labour market maintained its positive momentum, with employment showing consistent growth nationwide. In October 2024, employment rose by 1.9% YoY and 0.2% MoM, expanding the total workforce to 16.72mn individuals. This continued improvement in Malaysia’s labor market was primarily driven by resilient economic growth, which has bolstered investor confidence, encouraging global businesses to expand and establish operations in the country. Additionally, the influx of international tourists significantly boosted the tourism sector, further strengthening Malaysia’s economy and supporting the expansion of the labor market in October 2024.

• Particularly, the number of employed persons, which was concentrated in the Services sector, continued to record increases, particularly in Wholesale & retail trade, Food & beverage services and Transportation & storage activities. On the same note, the Manufacturing, Construction, Mining & quarrying and Agriculture sectors also registered positive employment growth during the month. 

• Meantime, the number of unemployed individuals continued to decline, decreasing by 3.4% YoY to 551.4k individuals (Sept24: 555.3k persons), gradually approaching the prepandemic levels of 519k in 2019. On a monthly basis, the number of unemployed people decreased by 0.7%. During the month, the jobless rate held steady at 3.2%. 

• The labour force (encompassing both employed and unemployed individuals) saw MoM expansion of 0.1% MoM or a YoY growth of 1.7% in October 2024, reaching a total of 17.27mn individuals. This growth suggests a healthy level of engagement in the labour market, with labour force participation rate at 70.5%. 

• Meanwhile, the number of individuals outside the labour force remained relatively stable on an annual basis, where there was a minimal MoM decline of 0.02%, totaling 7.228mn persons. Among those outside the labour force, 43% cited housework and family responsibilities as their primary reason for not participating in the labour market, followed closely by schooling and training at 41.9%. 

Our Thoughts 

• The nation's labour market performance showed a steady upward trend, complemented by a stable labour force participation rate and encouraging economic growth. This scenario is expected to keep raising the demand for jobs, stabilising the economy and creating new employment opportunities. The labour market is set for further improvement, building on the momentum gained from the government’s efforts to foster job growth and economic stability. This year, the unemployment rate is expected to average 3.3%, and based on this trajectory, it is likely that the jobless rate will average 3.2% in 2025, potentially reaching 3.1% by the end of the year. 

• However, one critical challenge remains: the mismatch between skills and job market requirements. Despite the overall positive trends, this mismatch continues to constrain the full realisation of the labour market's potential. Many employers report difficulties in filling vacancies for high-skilled roles, while job seekers increasingly accept low-skilled jobs. This trend is reflected in the growing share of low-skilled workers in the labour market, which rose from an average of 12% in 2021 to 13.2% in 9M24 (See Figure 3 - 5). 

• This shift suggests that many citizens are taking available jobs out of economic necessity rather than aligning with their qualifications or career aspirations. Such patterns may stem from limited access to upskilling opportunities, mismatched educational outcomes, or regional disparities in job availability. While it helps alleviate unemployment in the short term, this trend could hinder long-term economic productivity and individual income growth. To address these challenges, targeted interventions are crucial. These include expanding upskilling and reskilling initiatives, fostering public-private partnerships to align educational curriculums with market demands, and promoting regional economic development to create quality jobs across sectors. By tackling these structural issues, Malaysia can ensure a more resilient and inclusive labour market that supports sustainable economic growth.

Source: TA Research - 10 Dec 2024