The nation’s labour market in 2025 is set for recovery, with a projected unemployment rate of 3.23%, as job vacancies rise, particularly in construction and agriculture, while new opportunities emerge in healthcare and tourism
As we usher in the new year, 2025 brings optimism to Malaysia’s labour market, reflecting economic resilience despite the uncertainties.
The economic outlook for the fourth quarter of 2024 highlighted both encouraging progress and mixed signals, necessitating cautious interpretation.
Bank Negara Malaysia’s 2025 forecast highlights strong gross domestic product (GDP) growth, projected at between 4.5% and 5.5%, paired with an anticipated drop in the unemployment rate to 3.1%, marking its lowest level in a decade.
Inflation is expected to stabilise within 2.0% to 3.5%, supported by effective price control policies.
These indicators suggest a stable and growth-oriented trajectory for the nation’s economy.
On the global front, adaptive labour market policies will be crucial in managing economic changes.
PERKESO serves as a key body in the implementation of the policy, undertaking the critical role of monitoring unemployment rates alongside metrics such as Loss of Employment (LOE) and job placement outcomes.
As an agency under the Human Resources Ministry (Kesuma), PERKESO provides social protection under Act 4, Act 789, Act 800, and Act 838.
Figure 2: Job Vacancy Forecast 2025 (Data source: PERKESO)
By systematically collecting monthly data from contributors under these acts, PERKESO holds essential insights into private sector employees and employers, enabling reliable labour market projections.
Kesuma also supports the development of a healthier labour market by strengthening vocational training, aligning education with industry needs, and introducing initiatives to build a productive and competitive workforce.
Unemployment rate forecast: trends and recovery
The unemployment rate trend in 2024 has been consistent with previous forecasts. The same model continues to be used in 2025.
Since Malaysia’s transition to the endemic phase in April 2022, the unemployment rate has been on a gradual decline.
By 2025, the unemployment rate is expected to gradually decline from 3.26% to 3.21%, returning to pre-pandemic levels. This improvement is supported by positive GDP growth, stable inflation rates, and the Overnight Policy Rate (OPR).
Figure 3: Loss of Employment Forecast 2025 (Data source: PERKESO)
Among key sectors, agriculture is projected to experience a 5.98% labour force growth, followed by manufacturing at 2.69%, while the self-employed remains relatively stagnant at 0.37%, accounting for an estimated 5.93 million workers
.However, geopolitical uncertainties pose risks to these projections. A risk factor of 0.45 percentage points was identified in a time-series analysis, drawing parallels with the Dot-com Bubble crash of 2001.
Such risks, particularly heightened trade tensions between the United States and China, could disproportionately affect the technology sector during President Donald Trump’s administration.
Labour market robustness: the role of AI models
Forecasting inherently involves uncertainty, especially in a dynamic economic landscape. PERKESO’s labour market AI models are designed to analyse the dynamic changes in GDP growth, inflation rate, OPR and bank lending rate, allowing for accurate prediction of the unemployment rate for informed decision-making.
The productivity level, labour market, and living costs are closely interconnected. Hence the prediction for unemployment rate is analysed in 10 scenarios (Table 1).
Two AI models evaluate that the unemployment rate will remain within the forecasted trend (as shown in Table 1).
For instance, in Scenario 3, characterised by strong GDP growth alongside elevated inflation and stable interest rates, AI models predict the unemployment rate to range between 3.18% and 3.23%, maintaining alignment with broader forecasting trends.
Similarly in Table 2, the two AI models also predict the unemployment rate will be between 3.68% and 3.72% for scenarios with significant global economic shocks.
Labour market signals: vacancies and job losses
Data from PERKESO’s MYFutureJobs portal highlights encouraging trends, with job vacancies projected to surge from 1.70% in mid-2024 to 9.70% in 2025.
It signals that employers are responding to the dynamic shift of the economy, which was different six months prior with no significant vacancy growth.
Construction and agriculture sectors strongly lead the demand for employment opportunities, which are more resilient to the global geopolitical pressure. Conversely, forecasts for LOE indicate an increase, with job losses anticipated to rise from 10.8% in 2024 to 13.3% in 2025.
Manufacturing and service sectors are likely to lead this trend due to ongoing corporate restructuring, voluntary separation schemes, and cost-cutting measures, compounded by the sensitivities of global trade.
Comparing mid-2024 forecasts, the prior stagnation in job vacancies signified a hiring pause as businesses awaited clearer economic direction. The current upward trend in vacancies marks a shift towards recovery, offering optimism for the labour market.
Moreover, emerging “sunrise jobs” in 2025 suggest significant growth in specialised roles, including travel and tour agents; architect, civil, mechanical, electrical and construction professionals; oil and gas and chemical professionals; healthcare professionals; project managers; pilots and flight engineers; steel and metal specialists, underscoring diversification within the job market.
Summary: Key Insights for 2025
The economic outlook for 2025 remains optimistic, with the unemployment rate projected to return to pre-pandemic levels of 3.23%.
While geopolitical tensions present risks, particularly in the technology sector, the overall labour market shows strong recovery signals.
Job vacancies are expected to grow substantially, driven by post-pandemic recovery, especially in construction.
However, the rise in job losses highlights ongoing challenges in certain sectors.
Encouragingly, the emergence of new opportunities in agriculture, tourism, and healthcare offers hope for a more robust and diverse labour market.
Despite potential hurdles, 2025 stands as a year of cautious optimism for Malaysia’s labour market and economic landscape.
For more information, visit myfuturejobs.gov.my.
