Malaysia's Unemployment Rate in 2025: Trends and Insights

Since the COVID-19 pandemic, many countries, including Malaysia, have struggled with job shortages, leading to higher unemployment rates.

This situation has been influenced by various internal and external factors, and its effects are still being felt today.

So, what is the latest unemployment situation in Malaysia? Let’s explore it in this article. Keep reading!

What is the Unemployment Rate?

The unemployment rate is the percentage of people in the labor force who don’t have a job but are looking for one.

It’s an important measure to understand how the economy is performing in a country.

The labor force includes those who are working or actively job hunting. People who are not working and not searching for a job, such as students, homemakers, or retirees, are not included.

Tracking unemployment helps the government and businesses understand issues in the Malaysian job market and create solutions for them.

Current Unemployment Rate in Malaysia

As of November 2024, Malaysia’s unemployment rate remained at 3.2%, according to the Department of Statistics Malaysia (DOSM).

This is a slight improvement, with the number of unemployed people dropping to 546,700, compared to 551,400 in October 2024.

The labor force participation rate (LFPR), which shows the percentage of people working or looking for work, stayed at 70.5%.

Out of 17.29 million people in the labor force, 16.75 million had jobs, showing consistent growth in employment opportunities.

Historical Unemployment Trends in Malaysia from 1982 to 2024

This graph shows Malaysia's unemployment trends from 1982 to November 2024 based on Labor Force, Malaysia.

It highlights both the unemployment rate (yellow line) and the number of unemployed people (green bars). The data is divided into annual trends (1982–2020) and monthly trends (2021–2024).

In 1982, unemployment was at its highest, with 7.4% of people jobless, totaling 461,900 unemployed individuals.

Over the years, unemployment dropped steadily, staying between 3.4% and 3.7% from the 1990s to the late 2010s.

The COVID-19 pandemic in 2020 caused a sharp rise in unemployment, reaching 4.3% and 694,400 unemployed individuals in 2021.

However, recovery followed, and by November 2024, the rate dropped to 3.2%, with 546,700 unemployed people. This shows Malaysia's economy is stabilizing post-pandemic.

Furthermore, Labor Force Malaysia also shows the unemployment situation into two categories: actively unemployed (those looking for work) and inactively unemployed (those not seeking work).

The actively unemployed make up 79.8%, while the inactively unemployed account for 20.2% in both months.

For the actively unemployed, most people were jobless for less than 3 months, making up 62.6% in October and 62.2% in November.

About 20.6% were unemployed for 3 to less than 6 months, while a small percentage, around 6%, were unemployed for more than a year.

These numbers show that most unemployment in Malaysia is short-term, with only a few people facing longer periods without work.

Factors Affecting the Unemployment Rate in Malaysia

The unemployment rate in Malaysia is shaped by different factors that affect the availability of jobs and people's ability to get hired. Here’s a closer look at the main factors:

1. Economic Growth

Malaysia’s GDP growth directly impacts job availability. During economic slowdowns, such as the COVID-19 pandemic, unemployment rose sharply.

For example, the unemployment rate increased to 4.3% in 2021, with 694,400 people unemployed, as economic activities were disrupted.

However, during slowdowns or recessions, businesses may reduce their workforce or stop hiring altogether.

This can lead to higher unemployment because there aren’t enough jobs to go around.

2. Industry Shifts and Job Market Dynamics

Changes in major industries like manufacturing and services have affected employment rates.

Automation and technology have replaced many manual and repetitive jobs, especially in factories.

While these advancements make businesses more efficient, they also reduce the need for certain workers.

As Malaysia transitions to a knowledge-based economy, some sectors experience layoffs due to automation, while others create demand for skilled workers.

This mismatch affects unemployment duration, with 62.2% of unemployed individuals in November 2024 being jobless for less than 3 months as shown in Chart 4.

At the same time, new industries, like tech and renewable energy, are growing and creating new jobs.

However, these jobs often require specific skills or training, and not everyone is ready for these roles. This creates a mismatch, where some jobs stay vacant while others disappear.

3. Education and Skill Levels

Education plays a key role in employment. In Malaysia, some workers may have qualifications that don’t match the jobs available.

For example, a graduate in one field might struggle to find a job if companies are hiring in other fields.

In-demand jobs, such as those in technology or engineering, require specialized training.

Without the right skills or certifications, many people find it hard to compete for these jobs. This leads to unemployment even when jobs are open.

4. Demographics

Different groups in Malaysia face unique challenges in finding work:

Fresh graduates often struggle to find jobs because they lack work experience.
Fewer women participate in the workforce compared to men, often because of family or cultural responsibilities.
Foreign workers sometimes compete with locals for jobs in sectors like agriculture and construction, which can impact unemployment rates for certain groups.

These factors create differences in unemployment among various age groups, genders, and communities.

Youth unemployment, in particular, is higher due to a lack of job readiness or skills mismatch.

For example, a significant portion of those unemployed are actively searching for work (79.8%) but may lack the qualifications required for current job openings.

5. Government Policies and Initiatives

The government plays a key role in reducing unemployment. Initiatives like job training programs and hiring incentives encourage businesses to employ more people.

Government initiatives post-COVID-19 helped reduce the unemployment rate to 3.2% by November 2024, indicating recovery through policy support and job stimulus efforts.

For example, training programs help workers improve their skills, while subsidies reduce the cost for companies to hire new staff.

Policies that support investment in industries like technology or green energy also create new job opportunities.

The success of these programs depends on how well they address the needs of both workers and employers.

Youth Unemployment in Malaysia

Youth unemployment is a big issue in Malaysia, as many young people struggle to start their careers.

According to the Department of Statistics Malaysia (DOSM), the youth unemployment rate for individuals aged 15 to 24 has remained around 10% in recent years.

Fresh graduates often struggle to find jobs because they lack the skills or experience employers want. Many companies prefer candidates with hands-on experience, making it harder for young job seekers to compete.

Many graduates have degrees, but these don’t always match the jobs available.

To fix this, Malaysia has programs to help young people get better job chances. These include internships, apprenticeships, and graduate employability programs that give real-world experience and skills.

Internships let students and graduates learn from professionals, and apprenticeships provide hands-on training at job sites.

These programs help young people improve their resumes and get hired more easily.

While youth unemployment is still a challenge, Malaysia is working to give its young workforce the skills and experience they need to succeed.

Although Malaysia's unemployment rate is relatively low at 3.2%, there are still challenges like youth unemployment and skills mismatches that need attention.

By understanding these trends, policymakers, businesses, and workers can make better decisions to improve the job market and provide more opportunities for all.

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