The labour market is expected to maintain its favourable trajectory into the second half of 2026 (2H26), with the full-year unemployment rate to remain low at 3%.
This will be supported by resilient household demand and continued expansion in the services and manufacturing sectors.
Tourism-related activities, the global semiconductor upcycle and continued digital infrastructure development are expected to further sustain businesses’ hiring and headcount retention.
The government will also address sectoral manpower shortages through measures to improve job conditions and attract local talent, while accelerating automation and technology adoption to enhance worker productivity.
Overall labour productivity is projected to expand 3.4% this year to RM108,100, underpinned by ongoing strategic investments in high-impact sectors including digital technology, data centres, and electrical and electronics, alongside talent development and greater technology adoption.
The construction sector is expected to register the strongest productivity growth at 4.4%, followed by manufacturing at 4% and services at 3.6%.
The Malaysian labour market remained stable in 1H26, underpinned by stronger-than-expected economic growth driven by robust domestic demand and the external sector.
Total employment grew 1.1% to 16.8 million workers, while the unemployment rate remained at 3%, equivalent to 509,700 unemployed persons.
The services sector accounted for the largest share of employment at 66.7%, followed by manufacturing at 16.2% and agriculture at 8.7%.
Meanwhile, the labour force participation rate rose to 70.9%, reflecting greater workforce engagement amid healthy employment prospects.
Labour demand was encouraging, supported by sustained job creation and expanding vacancies.
Businesses generated 64,270 new jobs, marginally lower by 1.3% from 65,138 in the corresponding period of 2025, while total vacancies edged up 0.4% to 195,730 positions. The number of expatriates rose 1.5% to 123,088 as at the end of August 2026, reflecting sustained demand for specialised expertise.
