PETALING JAYA: The labour market is expected to remain resilient with near full employment in 2026, supported by steady hiring in domestic-oriented sectors, rising household incomes and government initiatives to upskill workers in the high-tech as well as green industries.
Maybank Investment Bank Research (Maybank IB) and Kenanga Research expected the unemployment rate to stay at 3% in 2025 and 2026, sustaining its lowest level in a decade.
“The near full employment conditions reflected by the stable 3% unemployment rate, combined with rising household incomes, will create favourable conditions for real private consumption expenditure,” said Maybank IB, which had forecast private consumption growth at 5.3% for 2025.
The unemployment rate held steady at 3% in August 2025 for the fifth straight month, according to both research houses, reflecting a stable labour market.
The number of unemployed declined to 520,000 persons, while employment grew 3.1% year-on-year to 16.98 million.
Job gains were broad-based, driven mainly by the services sector – notably wholesale and retail trade, information and communication, as well as food and beverage services – with support from manufacturing, construction, agriculture and mining.
Maybank IB noted that re-employment remained strong despite a rise in retrenchments to 6,683 persons in August, saying the continued low unemployment rate “suggests re-employment of these displaced workers”.
A notable trend is the steady increase in “own account workers”, which reached 3.22 million in August amid rising gig work participation.
The passage of the Gig Workers Bill and the planned i-Saraan Plus scheme under Budget 2026 underscore the government’s commitment to bolster the social safety net for the informal workforce.
Kenanga Research highlighted that the labour force participation rate hit a record 70.9%, with the total labour force rising to 17.51 million.
Employment expanded across all worker categories – employers, employees and own-account workers – while unpaid family workers continued to decline for the 11th consecutive month.
Looking ahead, it expected job creation to accelerate ahead of Visit Malaysia 2026, with 47 million tourist arrivals expected to lift employment in tourism-related services.
Budget 2026’s emphasis on workforce development – including RM3bil for HRD Corp’s upskilling programmes and RM650mil for Perbadanan Tabung Pembangunan Kemahiran training in artificial intelligence, electric vehicle and semiconductor sectors – should further support youth employment and sustain overall labour market conditions.
