Malaysia’s unemployment rate has registered a new post-pandemic low in June 2023 at 3.4%. Overall, Malaysia’s labour force and employment expanded by 1.9% and 2.3% on a year-on-year basis respectively, supported by upbeat domestic economic momentum. On a monthly basis, employment grew by 0.2%, which constitutes 24 consecutive months of positive growth. This data was reported in the June 2023 Labour Market report, by the Malaysian Industrial Development Finance (MIDF) research.
Meanwhile, unemployment dipped further by 7.8% y-o-y, marking 22 consecutive months of contraction. For youths aged 15 to 24, unemployment rate was unchanged at a post-pandemic low of 11%, but remained above pre-pandemic level (2019: 10.4%). By employment type, employees grew steadily by 1.4% y-o-y, making up about 75.4% of the employment market. Of the remaining, employers and own-account-workers increased by 5% y-o-y and 6.6% y-o-y respectively in June.
MIDF projects that the improvement in the job market will further reinforce consumer consumption and support the overall GDP growth for the year. However, the report said that a slight moderation of employment growth is expected in the second half of 2023 due to a slump in external trade performances. Job vacancies returned to above 200,000 levels, which had rebounded to 217,100 in May 2023. Nonetheless, a moderating pace in employment growth is expected in the second half of 2023 amid tightness of the job market.
MIDF believes that the elevated job vacancies, among other factors, has supported the steady employment growth and reduction in unemployment as well as outside labour force from early 2021. The services sector comprised the biggest share at 67.7% of the total vacancies. Job vacancies in construction dropped to 9.8%, while agriculture recorded a higher rate at 7.6%. Vacancies in the manufacturing sector remained at a low level of 14.6%, down from last year’s average of 32.4%. MIDF projects job vacancies to maintain between 150,00 to 250,000 per month for 2023 due to external trade weakness in the second half of 2023.
The MIDF report added that Malaysia also retains its 2023 average jobless rate forecast at 3.5%. The labour market in Malaysia is expected to strengthen further in 2023 and 2024, backed by positive impetus in the domestic economy. Malaysia’s average unemployment rate is expected to decline further to 3.5% in 2023 and return to pre-pandemic levels of 3.3% in 2024.
The return of non-citizen workers is also expected to boost overall employment and reduce the jobless rate. As of the first three months of 2023, non-citizens’ employment is approximately 4.4% lower than pre-pandemic levels.
