Malaysia’s Workforce Grows to 17.2 Million in July as Job Market Stabilises

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Malaysia’s workforce expanded slightly in July, growing from 17.17 million to 17.20 million, while the unemployment rate held steady at 3.3%, according to the latest Labour Force Statistics. Though modest growth signals stability in the national economy, with 26,300 individuals finding employment during the month.

The number of employed persons increased by 0.2%, rising from 16.61 million in June to 16.63 million in July, as reported by Datuk Seri Dr. Mohd Uzir Mahidin, the country’s chief statistician. Analysts attribute this steady improvement to higher consumer spending, robust local business activity, and a rise in exports, tourism, and investment into the country.

“The country’s labour market remained stable, reflecting Malaysia’s improving economic position, with a consistently growing number of employed persons while the number of unemployed is decreasing,” said Datuk Seri Dr. Uzir Mahidin.

Growth Across Sectors

During this period, employees made up three-quarters of Malaysia’s workforce, rising 0.1% to 12.48 million compared to 12.46 million in June. The services industry saw the most notable hiring growth, particularly in the food & beverage and wholesale & retail trade sectors. Other industries, such as manufacturing, construction, mining & quarrying, and agriculture, also experienced an uptick in hiring.

Unemployment Rate Holds Steady

Malaysia’s unemployment rate remained unchanged at 3.3%, with the number of unemployed persons decreasing by 0.3%, from 565,300 in June to 563,700 in July. Year on year, unemployment declined from 579,200 in July 2023. Notably, 80% of the unemployed population were actively seeking jobs, with 61.5% having been unemployed for less than three months. However, youth unemployment among those aged 15 to 24 remained high at 10.5%.

The labour force participation rate stood firm at 70.4% in July.

Underemployment: A Cause for Concern

Despite overall positive trends, underemployment has become a significant concern. Speaking at Universiti Sains Malaysia, HR Minister Steven Sim emphasized that underemployment—when individuals are overqualified for their current positions—stood at 37% in the second quarter. Sim warned that 750,000 workers falling into this category could have far-reaching consequences for the national economy.

“If their productivity drops by 20% due to skills mismatch, it’s equivalent to losing the productivity of 150,000 workers,” he explained. “This could result in a GDP growth reduction of 1% to 1.5%, translating to an economic loss of US$4.2 billion to US$6.3 billion annually.”

A Positive Economic Outlook

Overall, Malaysia’s economy has demonstrated resilience in the face of global challenges. Findings from McKinsey show that Malaysia delivered strong second-quarter results, with economic growth accelerating to 5.9%, marking the highest growth since the start of 2023. This growth has been fueled by export expansion, strong domestic demand, and robust investment activities.

The ringgit also performed well during the quarter, emerging as one of the best-performing currencies in the region, while inflation experienced only a nominal increase.

As Malaysia’s workforce continues to grow and the unemployment rate holds steady, the country is demonstrating strong economic fundamentals. However, underemployment must be addressed to ensure sustained growth and productivity. As Malaysia prepares for the future, combining a growing workforce, steady economic expansion, and focused policies could pave the way for long-term prosperity.