Page 26 - BPAReport

CHAPTER 2: PRIMER ON THE LABOUR MARKET IN MALAYSIA

2.1 The labour market in Malaysia

1. The labour force in Malaysia rose to almost 15.0 million persons in 2017 from 14.7
million in 2016 (Figure 1). This figure in 2017 represented 68% of the working age
population of Malaysia, referred to as the labour force participation rate, which experienced a
marginal increase from the rate of 67.7% in 2016. Within the labour force, about 14.4 million
were gainfully employed in 2017, and employment increased by a net amount of 286,300
persons during the year. There were 502,600 persons unemployed which represented an
unemployment rate of 3.4% in 2017, almost unchanged from 2016.

Figure 1: Principal statistics of the labour force in Malaysia, 2016-2017

Working Age
Population (‘000)
2016 - 21,655.4 Labour force
2017 - 22,004.7 participation rate
(LFPR)
2016 - 67.7%
2017 - 68.0%
Labour Force Outside the Labour
(‘000) Force (‘000)
2016 - 14,667.8 2016 - 6,987.6 Unemployment
2017 - 14,952.6 2017 - 7,052.1 rate
2016 - 3.4%
2017 - 3.4%
Employed (‘000) Unemployed (‘000)
2016 - 14,163.7 2016 - 504.1
2017 - 14,450.0 2017 - 502.6

Source: Labour Force Survey Report 2017, Department of Statistics Malaysia

2.2 Foreign workers in the workforce of Malaysia

2. Sustained and rapid economic growth in Malaysia in the last two decades have
resulted in Malaysia having a very tight labour market, in part reflecting the small population
base of Malaysia. This can be seen in the low unemployment rates, oscillating around 2% to
3% observed throughout this period. Malaysia can be said to be in a full employment mode.
The rapid industrialization as well as the increasing urbanization, accompanying the strong
economic growth contributed to acute labour shortages. This is particularly so in the rural
areas, where rural worker migration to industry locations near emerging metropolitan cities
created manpower shortages for the plantations and other agricultural activities.

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