Malaysia’s labour productivity rises in Q1 2025, led by construction and manufacturing sectors

Overall growth remains steady as hours worked and employment continue to increase.

Malaysia’s labour productivity per hour worked grew by 1% in the first quarter (Q1) of 2025, reaching RM42.50 per hour, according to the Department of Statistics Malaysia's (DOSM) Labour Productivity Statistics, Malaysia, First Quarter of 2025.

Per the findings, the country’s economy grew by 4.4% in Q1 2025, a slight decrease from 4.9% in Q4 2024. The total number of hours worked rose by 3.3%, hitting 9.8bn hours, while employment grew by 3.0% year-on-year to 16.9mn people.

Sectoral performance in productivity

Much of the productivity gains were driven by the construction sector, which saw a huge growth of 11.3% in labour productivity per hour worked.

The manufacturing sector also recorded solid productivity growth of 2.8%, fuelled by improvements in key subsectors such as:

• Vegetable and animal oils & fats and food processing (+9.3%)
• Beverages and tobacco products (+7.1%)
• Electrical, electronic and optical products (+6.6%)

Meanwhile, the services sector posted marginal growth of 0.5%, with mixed performances across its subsectors. Positive gains were observed in:

• Real estate and business services (+6.0%)
• Transportation and storage (+4.3%)
• Other services (+2.8%)
• Information and communication (+0.8%)
• Wholesale and retail trade (+0.6%)

However, three subsectors saw declines, notably utilities (-6.3%), food & beverage and accommodation (-2.5%), and finance and insurance (-0.4%).

The agriculture sector managed a small 0.1% increase, recovering slightly from negative growth in the previous quarter. In contrast, the mining and quarrying sector continued its downward trend, recording a -0.9% drop.

Value added per employment also sees a rise

In addition to per-hour productivity, labour productivity per employment rose by 1.3%, bringing the value added per person employed to RM24,580.

Once again, construction led the way with a 13.2% surge in value added per employment, followed by:

• Manufacturing (+2.2%)
• Services (+0.8%)
• Agriculture (+0.3%)

The mining and quarrying sector, however, declined by 3.2%.

Within the services sector, a few sub headers stood out for positive growth:

• Real estate and business services (+5.1%)
• Transportation and storage (+4.3%)
• Other services (+2.9%)
• Finance and insurance (+0.8%)
• Food & beverages and accommodation (+0.2%)
• Wholesale and retail trade (0.1%)

However, utilities (-5.9%) and information & communication (-0.1%) saw a decline. In manufacturing, productivity per employment rose across several segments, ex except in sectors such as electrical electronic and optical products (6.4%). Meanwhile transport equipment, other manufacturing and repair saw a decline (-8.8%).

Sharing his insights on the findings, Dato' Sri Dr. Mohd Uzir Mahidin, Chief Statistician Malaysia noted that the results were driven by steady labour market growth, active business activity, and strengthening human capital. He added that despite challenges tied to labour market reforms and economic uncertainties, Malaysia's labour productivity remains on a firm path toward a resilient and positive outlook.

“Thus, the existence of the strategic implementation and workforce development are crucial in ensuring the enhancement of labour efficiency,” he said.

Lead image / Department of Statistics Malaysia Official Portal