How informal and formal sector employment fared in Malaysia in 2023: DOSM

Informal employment in the formal sector was more concentrated than in the informal sector, amounting to 1.48mn (51.9%) and 1.34mn (47.2%) persons respectively.

The Department of Statistics Malaysia (DOSM) released its Informal Sector and Informal Employment Survey Report for 2023 on Thursday (28 November), providing statistics according to demographic and socioeconomic characteristic (age group, sex, strata, state, educational attainment, employment status, employment category and industry).

Before breaking down the statistics, the terms of the findings are as follows:

Informal sector: Comprises household members aged 15 to 64 who work at least one hour a week as employers, employees, own-account workers and unpaid family workers. The sector is characterised by enterprises with fewer than ten employees and those not registered under specific forms of national legislation.

Informal employment: According to the International Conference of Labour Statisticians (ICLS) guidelines, this is defined as the total number of informal jobs, whether carried out in formal sector enterprises, informal sector enterprises, or households.

Any worker who does not have access to at least one social security scheme or employment benefit also falls in this category. Such schemes and benefit refer to pension fund, basic health insurance, injury insurance, disability benefits, survivors’ benefits, paid annual leave, paid sick leave, paid maternity leave and unemployment insurance.

Informal and formal employment figures in 2023

According to the report, in 2023, the total informal employment including agriculture was reported to amount to 3.45mn persons with 1.83mn (53.2%) falling under the informal sector, 1.59mn (46.1%) under the formal sector and households with 24,200 persons (0.7%). Meanwhile, the number of informal employments for non-agriculture across all sectors held 2.84mn persons. Informal employment in the formal sector was more concentrated than in the informal sector, amounting to 1.48mn (51.9%) and 1.34mn (47.2%) persons respectively.

The male distribution of informal employment including in agriculture held a higher composition than females holding 61% (2.10mn) and 39% (1.35mn) respectively. The percentage of males remained dominant in the non-agricultural category as make up 55.7% (1.58mn) of the population while females held 44.3% (1.26mn). Urban areas held the largest percentage of informal employment people with 74.9% (2.58mn) while rural areas only held 25.1% (0.87mn).

In the non-agriculture sector, urban areas continued to account for a higher percentage than rural areas with 83.2% (2.37mn) and 16.8% (0.48mn) respectively.

Meanwhile, employment in the informal sector for non-agriculture saw an increase of 4.2% from 2021 (1.24mn to 1.34mn persons). Similarly, male and female workers here rose by 0.5% and 9.1% respectively, from 713,900 to 720,400 males and 522,900 to 622,100 females within the span of a year. Males were the largest contributor to employment in the informal sector including agriculture as they account for 62.5% while females held 37.5% of the entire sector.

Notably, most employment in the informal sector were operated at home, followed by agricultural related areas (plantations, farms, estates, seas, and more) and independently from home (factories, offices, workshops, shops, kiosks). Each of these areas made up 29.1%, 26.8% and 16.5% of the sector respectively.

Analysing the employment by stratum, urban areas have been recorded to have seen an increase of 5.8% in employment in the informal sector while rural areas decreased by 10% overall.

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