Malaysian labour market remains resilient amid headwinds from US tariffs
Unemployment rate stays steady for third straight month at 3% in June, with number of unemployed declining to 518,700
KUALA LUMPUR, Malaysia (MNTV) – Malaysia’s labour market is expected to remain steady amid robust domestic demand and expansion in the services sector despite concerns over US tariff uncertainties, geopolitical tensions, reports The Edge Malaysia.
BIMB Securities Research in a note warned that the 19% US tariff on Malaysian goods poses downside risks, particularly for export-oriented manufacturing.
Of greater concern, it added, is the potential expansion of tariffs to currently exempted products such as semiconductors and pharmaceuticals, of which semiconductor tariffs possibly rising to as high as 100%.
This could significantly dampen orders, constrain hiring, limit wage growth, and threaten employment in Malaysia’s key electrical and electronic clusters and industrial hubs.
“Despite these headwinds, employment growth is expected to remain steady, with the unemployment rate projected to average around 3.2% in 2025,” it said.
UOB Global Economics & Markets Research also raised concerns over tariffs.
It said that government measures — including the expanded sales and service tax (SST), the mandatory 2% Employees Provident Fund (EPF) contribution for foreign workers, and the retargeted RON95 fuel subsidy mechanism — could strain companies’ profitability and, in turn, dampen the employment outlook if they struggle to sustain operations.
Still, the research house maintained its 2025 unemployment rate forecast at 3.2%, pending the tabling of Budget 2026 on Oct 10. “We look forward to any announcement of additional job-related policy measures and business support initiatives in Budget 2026, aimed at sustaining economic momentum and maintaining labour market stability,” said UOB.
According to the latest data from the Department of Statistics Malaysia’s Labour Force Statistics, the unemployment rate held steady for the third straight month at 3% in June, with the number of unemployed declining to 518,700.
The labour force grew by 0.3% month-on-month to 17.43 million persons from 17.38 million in May.
MBSB Research kept its 2025 unemployment rate forecast at 3%, supported by higher employment and sustained job opportunities, particularly in the services sector.
“However, tariff-related disruptions could dampen global demand and weigh on hiring in export- and commodity-linked sectors,” it said. “In contrast, rising employment and steady wage growth are expected to be concentrated in domestic-oriented industries that are relatively insulated from the impact of higher US tariffs”.
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