The finance ministry said the labour force expanded by 2.4% to 17.3 million persons, while the labour force participation rate increased to 70.8%.
The unemployment rate is projected to stay at 3% for the year, said the ministry in its 2026 Economic Outlook report released today.
“The labour market is expected to remain optimistic in 2026, underpinned by resilient domestic demand and the continued expansion in key sectors,” said the ministry.
“It will also be supported by a boost in tourism following the Visit Malaysia 2026 campaign and the roll-out of strategic public investments under the 13th Malaysia Plan (13MP).”
The services sector remained the main source of jobs in the first half (H1 2025), accounting for 66% of total employment, followed by manufacturing (16.2%) and agriculture (8.8%).
Job placements surged by 150% with over 188,500 individuals securing employment in H1, while retrenchments stayed low at 34,005.
As of June, there were 108,500 job vacancies, 42.4% of which were in skilled occupations.
The labour market is expected to expand further, driven by growing demand for talent amid increased business activity, digitalisation, and tourism under Malaysia’s Asean chairmanship this year.
Drop in number of foreign workers
The number of registered low-skilled foreign workers fell 15% to 2.1 million as of August following a government freeze on new quota approvals until year-end.
The freeze aims to reduce dependency on low-skilled labour and encourage industries to adopt automation and high-value activities.
Most foreign workers were from Bangladesh (37.4%), Indonesia (25.6%), and Nepal (15.5%), with the largest shares in manufacturing (29.5%), construction (27.7%), and services (18.1%).
Meanwhile, the number of expatriates rose 6.9% to 121,310, mainly from China, India, and the Philippines, and largely employed in information technology (40.8%), services (16.3%), and manufacturing (11.8%).
Labour productivity grew 2.7% to RM49,753 per worker in H1 2025, driven by double-digit gains in the construction sector.
Productivity for the full year is projected to increase 2.5% to RM101,700, supported by skills training, digital adoption, and business modernisation.