Malaysia's labour force Oct 2021: Growth in employment and participation rate

While the upward trend of employed persons continued, the number of unemployed persons continued to decrease on a month-on-month basis by 3.4%, recording a total of 705 thousand unemployed persons.

Malaysia's Department of Statistics (DoSM) has released its October 2021 labour force statistics. Some notable trends include:

1. The upward trend of employed persons persisted during October 2021

The upward trend of employed persons saw a month-on-month addition of 91.1 thousand persons to 15.55mn persons, an overall increase of 0.6% from September 2021 (15.46mn persons). Similarly, the number of employed persons also held steady year-on-year with an increase of 347.5 thousand persons, or 2.3%. For comparison, October 2020's statistics saw 15.21mn persons.

The report defines an employed person as a person who, at any time during the reference week worked at least one hour for pay, profit or family gain (as an employer, employee, own-account worker or unpaid family worker).¹

Breaking it down further by economic sector, the number of employed persons in the services sector continued to rise, particularly in:

1. Wholesale and retail trade;
2. Food & beverages services;
3. Information & communication; and
4. Transport & storage activities.

Also worth noting, employment in manufacturing and construction sectors remained positive for the third month, while agriculture and mining & quarrying sectors continued seeing a decreasing trend.

The employment-to-population ratio for October, an indicator of an economy's ability to create employment, went up by 0.3 percentage points to 65.8% - September 2021 previously recorded 65.5%. Overall, for the year-on-year comparison, the ratio rose by 0.5 percentage points from 65.3% in October 2020.

The employees’ category which made up 77.0% of total employed persons, sustained positive growth in October 2021, with an increase of 0.4% (+45.3 thousand persons) as compared to September 2021. This brings the total number to 11.97mn persons (September 2021: 11.93mn persons).

Likewise, the own-account workers category which consists mostly of daily income earners working as small business operators such as small retailers; hawkers; sellers in markets and stalls; as well as smallholders experienced a growth of 1.4%. The encouraging month-on-month growth in both employment categories reflected the positive impact of the resumption of economic activities and the lifting of the inter-state travel ban during the month. 

In October 2021, the number of employed persons temporarily not working also further declined to 122.7 thousand persons from 380.7 thousand in the previous month. A similar trend was observed when comparing with October 2020, where this category recorded a decline of 61.0 thousand persons (September 2020: 450.6 thousand persons). This group of persons, who were most likely not able to work was not categorised as unemployed as they had work to return to.

2. Unemployment dipped to the lowest rate since April 2020

October 2021's numbers saw unemployment dip to its lowest rate since April 2020, recording 4.3% (September 2021: 4.5%). The number of unemployed persons continued to decrease on a month-on-month basis by 3.4%, equivalent to 24.7 thousand persons, recording a total of 705.0 thousand unemployed persons. For full reference, September 2021 recorded 729.6 thousand persons. Despite the number of unemployed persons being on a declining trend, it is still notably higher than pre-pandemic levels.

In comparison with the previous year, the unemployment rate decreased by 0.4 percentage points from 4.7% with the number of unemployed persons edging down by 5.8%, or 43.2 thousand persons (October 2020: 748.2 thousand persons). 

From the total number of unemployed persons during the month, 83.6% were actively unemployed, or those who were available and were actively seeking jobs. This group recorded a decrease of 3.5%, or 21.4 thousand persons, to 589.5 thousand persons from 611.0 thousand persons September 2021.

In terms of the duration of the unemployment, the unemployed persons for less than three months encompassed 55.5% while those who were in long-term unemployment of more than a year was 7.8%. As for the group of inactively unemployed who believed that there were no jobs available, the number decreased by 2.7% or 3.2 thousand persons to record 115.4 thousand persons (September 2021: 118.7 thousand persons). 

Further, the youth unemployment rate for those aged 15 to 24 in October 2021 was 13.9%. This number remains unchanged for the third month. In terms of number, the unemployed youths were added by 23.7 thousand persons (+6.6%) to 358.8 thousand persons (September 2021: 335.1 thousand persons). Nevertheless, the unemployment rate for youth aged 15 to 30 years recorded a fall of 0.4 percentage points month-on-month to 8.1% (September 2021: 8.5%). 

3. Labour force participation rate stepped up further to 68.8% 

The labour force number grew by 0.4% - equivalent to 66.5 thousand persons - to a total of 16.26mn persons. September 2021 had previously recorded a total of 16.19mn persons. Accordingly, the labour force participation rate (LFPR) stepped up further to 68.8%, an increase of 0.2 percentage points from 68.6% the previous month. 

The LFPR refers to the ratio of the labour force to the working age population (15 to 64 years), expressed as a percentage.

The year-on-year numbers also reflect a similar trend, as the labour force rose by 1.9%, or an addition of 304.3 thousand persons, from 15.96mn persons. The LFPR increased by 0.3 percentage points as compared to 68.5% in October 2020.

Per the report, the male population among the labour force reached 9.99mn persons (September 2021: 9.95mn persons), while the female labour force climbed to 6.26mn persons (September 2021: 6.25mn persons). Consequently, both male and female LFPR remains comparatively higher than the previous month.

^{1 They are also considered as employed if: 1) Did not work during the reference week because of illness, injury, disability, bad weather, leave, labour dispute and social or religous reasons but had a job, farm, enterprise or other family enterprise to return to. 2) Temporary laid-off with pay and would definitely be called back to work. 3) Employed less than 30 hours during the reference week because of the nature of their work or due to insufficient work and are able and willing to accept additional hours of work. This group is underemployed.}

Photo / Department of Statistics Malaysia

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