MALAYSIA’s labour market is expected to remain robust in 2025, with the unemployment rate forecast to average 3.2% despite emerging headwinds from shifting global trade dynamics, according to Maybank Investment Bank (Maybank IB).
The bank noted that Malaysia is currently enjoying what economists describe as a state of “full employment”, underpinned by improved income levels and supportive labour policies.
These include Phase 1 of the civil service pay restructuring, set to begin on 1 December 2024, and the scheduled increase in the monthly minimum wage from RM1,500 to RM1,700 on 1 February 2025.
“This stable labour market is supported by February 2025 data showing employed persons increasing by 2.9 per cent year-on-year to 16.73 million,” Maybank IB said in its latest report.
The steady employment outlook is also fuelling optimism in domestic consumption. However, the bank revised its private consumption growth forecast downward slightly, citing caution over external risks — particularly uncertainties surrounding United States tariff and trade policy.
“We revise our real private consumption growth forecast to 5.5 per cent versus 5.8 per cent and 5.3 per cent versus 5.5 per cent in 2025 and 2026 respectively,” the report noted.
Data from the Department of Statistics Malaysia (DOSM) showed the national unemployment rate held at 3.1% in February 2025 — the lowest level since May 2015.
The number of unemployed persons fell by 4.3% year-on-year, while employment rose by 2.9% during the same period. The labour force participation rate also edged up slightly to 70.7%.
Much of the job growth was concentrated in the services sector, with strong contributions from accommodation and food services, wholesale and retail trade, arts and entertainment, and information and communication industries.
Maybank IB added that the low and stable unemployment rate, alongside the shrinking pool of unemployed individuals, reflects a labour market that is not only absorbing retrenched workers but also seeing some exit the labour force entirely, possibly due to retirement or other reasons.
“The sustained low and stable unemployment rate, along with the decline in unemployed persons, suggests that retrenched workers were either able to secure new jobs or have exited the labour force altogether by no longer actively seeking employment,” the bank said.
However, concerns remain regarding youth unemployment, which held steady at 10.3% in February, representing 298,900 jobless youths. While this marks a stabilisation, the rate remains higher than the pre-pandemic low of 9.9% recorded in December 2019.
Despite this, the broader employment landscape is expected to remain a key driver of economic resilience, supported by rising incomes and ongoing structural reforms. - April 14, 2025
