KUALA LUMPUR: The labour market is expected to remain optimistic in 2026, underpinned by resilient domestic demand and the continued expansion in key sectors.
It will also be supported by a boost in tourism following the Visit Malaysia Year 2026 (VM2026) and the rollout of strategic public investments under the 13th Malaysia Plan (13MP).
The ongoing structural reforms, particularly the wage-setting mechanisms and efforts to enhance working conditions, are anticipated to encourage greater labour force participation and improve workers’ well-being.
“While lingering uncertainties in global trade may weigh on hiring in export- and commodity-related industries, robust growth in domestic-orientated sectors is expected to sustain employment and wage growth,” it said.
Accordingly, the unemployment rate is anticipated to remain at 3% in 2026. Total employment is projected to expand by 2.3% to 17.2 million persons, driven largely by job creation in the services and manufacturing sectors, which are expected to continue accounting for over 80% of total employment.
The report said the number of low-skilled foreign workers is expected to decrease in 2026, attributed to the strict approval of foreign worker quota applications on a case-by-case basis for specific approved sectors such as agriculture, construction, and certain service industries.
The government also remains committed to reducing the dependency on foreign workers by limiting the hiring ceiling from 15% to 10% of total employment, as outlined in the 13th MP.
The implementation of the multi-tiered levy mechanism in 2026 is also expected to further drive industries towards mechanisation and automation, thus further reducing demand for low-skilled foreign workers, it said.
On the other hand, continued demand for workers in the economy will be met through greater investment in automation and upskilling local workers to support productivity gains.
Labour productivity is projected to increase by 2% to record RM103,700 in 2026, supported primarily by improvements in the construction and services sectors.
The report said this growth will be reinforced by ongoing efforts to strengthen skills development programmes to better align with industry needs, alongside greater investments in digital transformation and mechanisation to accelerate technology adoption across industries.
Business
