Malaysia's unemployment rate expected to remain at 3pct in 2026

KUALA LUMPUR: Malaysia's unemployment rate is projected to stay steady at three percent by 2026, according to the Finance Ministry's Economic Outlook 2027 report. This projection is based on continuous hiring demand in services and manufacturing sectors. Despite a 20.6 percent drop in job placements to 74,874 in the first half of the year, the report anticipates resilience due to various factors.

The report highlights the role of resilient household demand, tourism activities, the global semiconductor upcycle, and ongoing digital infrastructure development in sustaining hiring and employee retention in the latter half of 2026. Malaysia's labour market showed stability in the first half, driven by robust economic growth fueled by domestic demand and the external sector. The labour force participation rate climbed to 70.9 percent, indicating increased workforce participation due to positive employment prospects.

Total employment expanded by 1.1 percent to 16.8 million people during the period, with an unemployment rate of three percent, corresponding to 509,700 unemployed individuals. The services sector headed the employment landscape, constituting 66.7 percent, followed by manufacturing at 16.2 percent and agriculture at 8.7 percent. Labour demand remained encouraging, with businesses adding 64,270 new jobs in the first half of 2026, a slight decline of 1.3 percent from 65,138 in the same period last year.

Job vacancies, however, increased by 0.4 percent to 195,730 positions, suggesting persistent demand for workers despite a more cautious hiring environment.