Data Highlights

• The labour market sustained its positive momentum, witnessing a consistent increase in employment across the country. Employment growth marked 2.0% YoY and 0.2% MoM rise in December 2023, resulting in a total workforce of 16.46mn individuals. 

• According to the latest statement from the Department of Statistics Malaysia (DOSM), the Services sector continued to record a rise in the number of employed persons, notably in Information & communication; Food & beverage services; and Transportation & storage activities. A similar trend in the number of employed persons was also observed in the Manufacturing, Construction and Mining & quarrying sectors in December 2023. In the meantime, the number of employed persons in the Agriculture sector continued to decline during the month. 

• The largest composition of employed persons remained in the ‘Employees’ category, comprising 75.2% of all employed individuals. This category saw an annual increase of 1.2%, equating to 152.7k new employees, bringing the total to approximately 12.38mn individuals. Similarly, the own-account workers category displayed a similar upward trend, with a YoY increase of 5.0% reaching a total of 3.0mn persons during the month, up from 2.86mn persons in December 2022. 

• Meantime, the number of unemployed persons continued its decline, decreasing by 5.3% YoY to 567.8k individuals (Dec 2022: 599.6k persons) which approaching the pre-pandemic levels of 519k in 2019. On a monthly basis, the number of unemployed persons decreased by 0.2%. 

• The labour force (encompassing both employed and unemployed individuals) saw MoM expansion of 0.1% or a YoY growth of 1.8% in December 2023, reaching a total of 17.03mn individuals. This growth suggests a healthy level of engagement in the labour market, with a labour force participation rate of 70.2%.

• Meanwhile, the number of individuals outside the labour force remained relatively stable on an annual basis, but there was a minimal MoM decrease of 0.004%, totaling 7.234mn persons. Among those outside the labour force, 42.6% cited housework and family responsibilities as their primary reason for not participating in the labour market, followed closely by schooling and training at 41.2%. 

• During the month, the jobless rate stood at 3.3%, the same rate seen in the previous month. In addition, the average jobless rate for 2023 aligns with our forecast of 3.4%, showcasing an improvement from the 3.8% recorded in 2022 and the 4.6% rate observed in 2021. Notably, employment rose by an average of 2.0% YoY while unemployment decreased by 8.1% YoY. 

• Our view: We anticipate the jobless rate to continue its downward trend, likely averaging at 3.2% this year. The rate is expected to fluctuate between 3.3% and 3.1%, with the labour force and employment numbers projected to increase by 2.1% and 2.2%, respectively. Meanwhile, unemployment is expected to decrease by 4.1%. 

• Concurrently, the government is proactively addressing issues such as low pay such as the Wage Progressive Model, to enhance the overall well-being of workers. Furthermore, as we anticipate a resurgence in the Chinese market and a continuous uptick in domestic demand in Malaysia, the unemployment rate is expected to benefit positively. The sustaining economic growth is likely to attract increased Foreign Direct Investment (FDI) into the country. The inflow of FDI is anticipated to stimulate business expansion, leading to additional job opportunities. The combined effects of government initiatives and the influx of FDI are poised to contribute to a more robust job market, creating favourable conditions for lower unemployment rates and improved overall labour market conditions.

Source: TA Research - 13 Feb 2024