Malaysia logs lowest unemployment rate of 3.4% since the pandemic

However, the monthly average total of job vacancies remained above 200,000, continuing the post-pandemic trend.

In positive news for the economy, 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 the 24^th consecutive month of positive growth.

This data comes from the June 2023 Labour Market report, produced by Malaysian Industrial Development Finance (MIDF) research.

Meanwhile, unemployment dipped further by 7.8% y-o-y, marking the 22^nd consecutive month of contraction.

Further, the number outside the labour force contracted for the 20^th consecutive month at -0.4% y-o-y. For youth aged 15 to 24, unemployment rate maintained 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.

As at Q2CY23 (quarter two, calendar year 2023), employment grew by 2.4% on a yearly basis (Q1CY23: +2.9%y-o-y), and the average jobless rate was at 3.47% (Q1CY23: +3.53%y-o-y). As MIDF projects, the improvement in the job market will further reinforce consumer consumption and support the overall GDP growth for the year. However, a slight moderation of employment growth is expected in H2CY23 (second half 2023) due to the 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 H2CY23 amid tightness of the job market. The monthly average job vacancies remained above 200,000, continuing the post-pandemic trend (2021: 206.7k, 2022: 396.1k). For comparison, the monthly average job vacancies from 2010 to 2019 was 114,000.

MIDF believes that the elevated job vacancies, among other factors, have supported the steady employment growth and reduction in unemployment as well as outside labour force from early 2021. Breaking it down further, the services sector comprised the biggest share at 67.7% of the total vacancies. Meanwhile, job vacancies in construction dropped to 9.8%, while agriculture recorded a higher rate at 7.6%. Lastly, 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 (2022: 396,300) due to external trade weakness in H2CY23.

According to MIDF, 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 impetues 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.

To add on, the return of non-citizen workers is expected to boost overall employment and reduce the jobless rate. As of Q1CY23, non-citizens' employment is approximately 4.4% lower than pre-pandemic levels. As of H1CY23, employment grew by 2.7% y-o-y  compared to 3.5% y-o-y in 2022. Unemployment also reduced by 10.4% y-o-y (2022: - 14.8%y-o-y) and the jobless rate averaged at 3.5% (2022: 3.8%). Continued improvement in the labour market will support consumer spending as the wage recipients to employment ratio reached a new peak of 64.5% back in 2021.

These employment trends are also reflected in the second quarter of 2023 by the Department of Statistics Malaysia, whereby the key findings include:

• Labour force continued to post an increase in Q2, with a rise of 0.5%, or 78,600  persons to register 16.73mn persons,
• Number of employed persons remained on a positive trend, with an increase of 0.5% to post a total of 16.15mn persons,
• Number of unemployed persons continued to decline to 581,400 person, with a reduction of 0.9% in Q2 2023,
• The labour force participation rate increased to 70% in Q2 2023.

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Lead image / Malaysian Industrial Development Finance