Malaysia’s labour market continued to show resilience in August 2025, with the number of employed persons increasing by 0.2%, or 39,100 people, to reach 16.99 million. It shows a steady improvement from 16.95 million recorded in July 2025, according to the latest figures released by the Department of Statistics Malaysia (DOSM).
The employment-to-population ratio, a key indicator of an economy’s capacity to generate jobs, also inched up by 0.1 percentage points to 68.8% in August, reflecting continued growth in job opportunities across key economic sectors.
Services Sector Leads Employment Growth
Employment growth in August was primarily driven by the Services sector, which maintained its upward momentum across several sub-sectors. Notable increases were observed in Wholesale and retail trade, Information and communication, and Accommodation and food & beverage services underscoring the sector’s central role in Malaysia’s post-pandemic recovery.
At the same time, other sectors including Manufacturing, Construction, Mining & quarrying, and Agriculture also saw moderate gains in employment, signaling broad-based improvements across the economy.
Employees Remain the Largest Workforce Group
Within the overall employment structure, employees continued to make up the dominant share of Malaysia’s workforce, accounting for 74.9% of total employed persons.
This group expanded by 0.2% (+20,200 persons) to 12.73 million in August, compared to 12.71 million in the previous month.
Meanwhile, the number of own-account workers typically self-employed individuals or small business owners also recorded positive growth, increasing by 0.5% (+15,400 persons) to 3.22 million, up from 3.21 million in July.
This rise suggests sustained entrepreneurial activity, particularly among those engaged in small-scale services and digital businesses.
Unemployment Holds Steady at 3.0%
The number of unemployed persons declined slightly by 0.3%, or 1,600 individuals, to 520,000 in August, reversing the increase seen in July.
Despite the small improvement, the unemployment rate remained unchanged at 3.0%, indicating that the labour market continues to operate close to full employment levels.
Economists view this as a positive signal, reflecting strong labour absorption capacity in both formal and informal segments of the economy.
Malaysia’s labour force grew in tandem with employment, increasing by 0.2% (+37,500 persons) to reach 17.51 million, compared to 17.47 million in July 2025.
The Labour Force Participation Rate (LFPR) also rose marginally by 0.1 percentage points to 70.9%, suggesting a greater number of Malaysians are actively participating in the workforce.
According to analysts, the steady increase in labour force participation reflects improving business sentiment and a recovery in hiring activities, particularly in urban areas and service-related industries.
Slight Rise in Persons Outside the Labour Force
Meanwhile, the number of persons outside the labour force rose slightly by 0.2% (+12,200 persons) to 7.20 million, up from 7.19 million in the previous month.
The main reasons cited for being outside the labour force were housework and family responsibilities (43.7%), followed by schooling or training (40.7%).
Although this segment recorded a small increase, economists note that the proportion remains stable and consistent with seasonal trends, such as education enrolment and caregiving responsibilities.
Overall, Malaysia’s labour market performance in August reflects a continued upward trajectory supported by job creation across major sectors and stable unemployment levels.
Analysts expect employment conditions to remain favourable through the final quarter of 2025, driven by domestic consumption, digital adoption, and recovery in tourism-related industries.
However, they also caution that challenges such as slower global demand, currency volatility, and automation pressures could influence hiring trends in the coming months.
With the labour force expanding and employment indicators improving, Malaysia appears on track to maintain a healthy and inclusive job market reinforcing its broader economic recovery momentum heading into 2026.
Shahriena Shukri is a journalist covering business and economic news in Malaysia, providing insights on market trends, corporate developments, and financial policies. More about Shahriena Shukri.
