Labour market likely to remain resilient in 2025
PETALING JAYA: The labour market is expected to maintain its positive trajectory throughout 2025, bolstered by strong macroeconomic policies, resilient domestic demand and stable unemployment.
Malaysia's labour market remained resilient in April 2025, with employment rising by 2.8% year-on-year (y-o-y) to 16.82 million persons.
Statistics also showed that the labour force participation rate increased to 70.8%, while the employment-to-population ratio sustained at 68.6%.
Job gains were mainly concentrated in the services sector, which was on an increasing trend, particularly in wholesale and retail trade; accommodation and food beverage services; and transportation and storage activities.
Likewise, the number of employed people also increased in the manufacturing, construction, agriculture and mining and quarrying sectors.
Meanwhile, the number of unemployed persons continued to decline, falling by 5.5% y-o-y to 525,900 in April 2025, moving closer to the pre-pandemic level of 519,000 recorded in 2019.
On a month-on-month basis, unemployment declined by 0.7%. Correspondingly, the unemployment rate eased by 0.1 percentage point to 3%, marking the lowest rate since April 2015, which also recorded a 3% jobless rate.
TA Research said the country's labour force is expected to maintain a positive trajectory in the coming months of 2025, supported by sound economic policies and stable domestic demand.
'Despite ongoing global geopolitical tensions, the labour market remains resilient, underpinned by a steady unemployment rate, robust growth in the services and technology sectors and rising investments in digitalisation and automation,' the research house said in a report yesterday.
TA Research added the labour market was also supported by the country's emergence as a prominent global hub for electrical and electronics products, particularly semiconductors.
'The government's strategic push to position Malaysia as a leading centre for energy and semiconductor manufacturing has attracted significant foreign investment.
'Notably, a Japanese company recently opened a state-of-the-art manufacturing facility in Pasir Gudang, Johor, creating 460 high-skilled jobs with competitive salary levels.
'This investment is expected to further strengthen Malaysia's position in the global manufacturing and assembly value chain, especially in semiconductor-related equipment, electronic devices and other advanced industries,' the research house said.
TA Research noted that the nation's unemployment rate has reached its year-end projection ahead of schedule. In light of this, the research firm revised its full-year 2025 unemployment rate forecast to an average of 3%, improving from 3.2% in 2024.
'During the first four months of 2025, total employment averaged 16.75 million, representing a 2.6% y-o-y increase.
'Meanwhile, the number of unemployed persons averaged 530,500, resulting in an unemployment rate of 3.1%,' TA Research said.
That said, the research firm also noted that it remains cautious of potential external and domestic headwinds.
Escalating trade tensions – particularly between the United States and China – pose downside risks to the country's trade-reliant sectors such as electronics, machinery and intermediate goods.
'This may lead to employment volatility in key export-oriented regions like Penang and Johor,' TA Research said.
To this end, Hong Leong Investment Bank (HLIB) Research, though it expects Malaysia's labour market to remain stable, also stated that downside risks remain.
'Ongoing global policy uncertainty may worsen domestic business sentiment.
'Additionally, while we anticipate minimal impact from the sales and service tax expansion taking effect on July 1, the potential pass-through of higher operational costs may prompt employers to be cautious.
'As such, we maintain our 2025 gross domestic product growth forecast at 4%,' the research house said.
BIMB Securities said caution is warranted for export-oriented sectors, as elevated global tariffs may weigh on employment and wage growth.
'Targeted government support and policy measures could help cushion these sectors, enabling firms to sustain hiring despite the more challenging global outlook,' the research house said.
Overall, BIMB Securities said employment is expected to grow at a steady pace, with the unemployment rate averaging around 3.2% for the year.
'Ongoing growth in the services and technology sectors – driven by rising investments in digitalisation, automation and infrastructure – is poised to enhance productivity and stimulate job creation.
'These favourable labour market dynamics are anticipated to support consumer spending and anchor economic growth, even amid uncertainties in the external trade environment,' the research house said.
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