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The unemployment rate dropped to 3.0% in 2025, the lowest in a decade, while employment, labour force participation, and youth employment all improved.
Malaysia's labour market remained resilient in 2025, with the unemployment rate falling to 3.0%, its lowest level in a decade, according to the Department of Statistics Malaysia's (DOSM) Annual Statistics of the Labour Force, Malaysia, 2025.
Released on 26 June 2026, the statistics showed improvements across key labour market indicators, including employment, labour force participation and labour underutilisation, reflecting continued strength in the country's labour market.
Commenting on the findings, Dato' Sri Dr. Mohd Uzir Mahidin, Chief Statistician Malaysia said the labour market continued to strengthen in 2025, supported by sustained economic resilience and improving employment conditions.
He noted that the number of unemployed persons declined to 507,200, driven largely by lower youth unemployment among those aged 15 to 24.
Meanwhile, the labour force expanded by 1.1% to 17.09mn people, compared with 16.90mn in 2024. The labour force participation rate (LFPR) also edged up to 70.8%, from 70.6% a year earlier, indicating stronger participation in the labour market.
Employment and labour force participation both increased in 2025
Employment growth also remained encouraging during the year. The number of employed persons rose by 1.3% to 16.58mn, up from 16.37mn in 2024. In line with this improvement, the employment-to-population ratio increased to 68.7%, reflecting the economy's ability to generate jobs.
Employees continued to make up the largest share of total employment at 78.4%, or 13.0mn people, followed by own-account workers at 15.7%, or 2.61mn people.
By occupation, semi-skilled jobs accounted for the largest share of employment at 57.0%, representing 9.45mn workers. Skilled occupations made up 30.1% (4.99mn), while low-skilled occupations accounted for the remaining 12.9% (2.15mn).
Across industries, the services sector remained the country's biggest employer, contributing 66.1% of total employment. This was followed by manufacturing (16.3%), agriculture (8.9%), construction (8.2%), and mining and quarrying (0.6%).
Fewer workers experienced underemployment during the year
The report also pointed to further improvements in labour underutilisation. The number of employed persons working fewer than 30 hours per week due to insufficient work or the nature of their jobs fell by 4.4% to 203,100, bringing the underemployment rate down to 1.2%, from 1.3% in 2024.
Time-related underemployment also decreased by 5.7% to 118,000 people, with the corresponding rate easing to 0.7%, compared with 0.8% a year earlier.
Meanwhile, skill-related underemployment, referring to tertiary-educated workers employed in semi-skilled and low-skilled occupations, declined slightly by 0.4% to 2.05 million people. As a result, the rate edged down from 36.1% to 35.6%.
Youth unemployment fell as fewer Malaysians remained out of work
Looking at unemployment, 79.2% of all unemployed persons were actively unemployed, meaning they were available for work and actively seeking employment. This group totalled 401,600 people, a decrease of 1.8% from the previous year.
Among actively unemployed persons, 63.7% had been unemployed for less than three months, while 5.6% had experienced long-term unemployment lasting more than one year.
The number of inactively unemployed persons, or those who believed there were no jobs available, declined by 15.8% to 105,600, compared with 125,300 in 2024.
Youth unemployment continued to improve during the year. The unemployment rate among those aged 15 to 24 fell by 0.7 percentage points to 9.6%, reducing the number of unemployed youths to 272,000.
Similarly, the unemployment rate among adults aged 25 to 64 eased to 1.6%, from 1.8% in the previous year, with the number of unemployed adults falling to 235,200.
Putrajaya recorded the country's lowest unemployment rate
At the state level, W.P. Putrajaya recorded the country's lowest unemployment rate at 1.1%, followed by Melaka (1.6%), Pahang (1.8%), and Pulau Pinang (1.9%).
Putrajaya also registered Malaysia's highest labour force participation rate at 79.0%, ahead of Selangor (78.4%), W.P. Kuala Lumpur (75.8%), and Pulau Pinang (72.2%).
Five states recorded female labour force participation rates above the national average of 56.6%:
- W.P. Putrajaya: 79.7%,
- Selangor: 70.7%
- W.P. Kuala Lumpur: 66.9%,
- Melaka and Pulau Pinang: 58.3%.
For skill-related underemployment, W.P. Kuala Lumpur posted the lowest rate at 22.8%, followed by W.P. Putrajaya (30.3%), Pulau Pinang (32.0%), Negeri Sembilan (32.5%), and Selangor and Perak at 34.6%.
By comparison, Kelantan recorded the highest skill-related underemployment rate at 50.5%, followed by Terengganu (45.1%) and Pahang (42.0%).
Green economy transition is expected to create new job opportunities
Separately, the number of people outside the labour force increased marginally to 7.03mn. Among them, 42.8% were outside the labour force due to housework or family responsibilities, while 42.2% were attending school or training.
Looking ahead, DOSM said Malaysia's transition towards a green economy and sustainable development is expected to create more employment opportunities in renewable energy, environmental management and green technology, while supporting the development of a highly skilled and future-ready workforce.
Overall, the department said Malaysia's labour market maintained positive momentum throughout 2025, supported by sustained labour demand across sectors and continued policy measures aimed at strengthening economic resilience and workforce participation.
Infographics / DOSM
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