Data Highlights

• In June 2023, Malaysia employment continued its upward trend, increasing by 2.3% YoY or 0.2% MoM to reach a total of 16.31mn individuals. Notably, the Services sector remained on an upward trend, mainly in Food & beverage services; Wholesale & retail trade; and Transportation & storage activities. The number of employed persons in the Manufacturing, Construction, Mining & quarrying and Agriculture sectors also exhibited increases during the month.

• Meantime, the largest composition of employed persons remained in the ‘employees’ category, comprising 75.4% of all employed individuals. This category saw a YoY increase of 1.4%, equating to 173.6k new employees, bringing the total to 12.30mn individuals. Similarly, the own-account workers category displayed a similar upward trend, with a YoY increase of 6.6% reaching a total of 2.95mn persons during the month, up from 2.77mn persons in June last year.

• At the same time, the number of unemployed persons continued its decline, decreasing by 7.8% YoY to 581.7k individuals (Jun22: 630.6k persons). Despite this positive trend, the current numbers have not yet returned to the pre-pandemic levels of 514k in 2018 and 519k in 2019. On a monthly basis, the number of unemployed persons decreased by 0.5%.

• The labour force, which includes both employed and unemployed individuals, expanded by 0.2% MoM or 1.9% YoY to 16.89mn individuals in June 2023. The labour force participation rose stood at 70 of the population, indicating a high level of engagement in the labour market. Meanwhile, the number of individuals outside the labour force slightly barely unchanged on MoM basis at -0.02%, resulting in a marginal 0.4% annual decrease to 7.23mn persons. Among those outside the labour force, 43.5% cited housework/family responsibilities as the primary reason, followed by schooling/training at 39.9%.

• The labour market is poised to maintain its stability in the coming months, benefiting from the still resilient domestic economy. This positive trend is expected to drive an increased demand for labour, playing a crucial role in further stabilising the economy. In June, the jobless rate decreased by 0.1 percentage point to 3.4%, slightly earlier than anticipated, as we projected the rate to begin its downward trend in July.

• Looking ahead, we maintain that the jobless rate will remain steady this year, averaging at 3.5% (compared to 2022's 3.8%). This projection aligns with our anticipation of a 7.3% reduction in the number of unemployed individuals this year and 2.5% upsurge in employment figures. While this year's efforts might not fully restore the jobless rate to pre-pandemic levels, we hold an optimistic outlook. The government's initiatives, particularly the introduction of the Madani Economy, are anticipated to create additional opportunities for Malaysians to secure employment. This, in turn, should contribute to an overall enhancement in the performance of the labour market.

Source: TA Research - 11 Aug 2023