Malaysia recorded stronger labour productivity in the fourth quarter of 2025, as value added per hour worked increased 4.9% to RM46.3, based on the latest data from the Department of Statistics Malaysia.

The improvement came as the wider economy expanded 6.3% during the quarter, compared with 5.4% in the preceding quarter. At the same time, total hours worked rose 1.4% to 9.9 billion hours, while total employment increased 1.8% to 17.1 million persons. Together, these figures suggest that economic output grew at a faster pace than labour input.

Output Per Worker Also Improved

Labour productivity measured by value added per employment increased 4.4% in the fourth quarter, reaching RM26,765 per person. This indicates that, on average, each worker generated more economic value compared with the same period a year earlier.

For the full year 2025, labour productivity per hour worked expanded 3.7% to RM44.5 per hour, while productivity per employment rose 3.4% to RM102,672 per person. The annual data points to steady gains in efficiency throughout the year.

Broad Based Gains Across Key Sectors

All major economic sectors recorded productivity growth in the fourth quarter when measured by value added per hour worked.

Construction led with a 10.3% increase, followed by Manufacturing at 6.4%, Agriculture at 5.5%, Mining and quarrying at 5.1%, and Services at 4.0%. When measured by value added per employment, Construction again recorded the strongest growth at 10.1%, with other sectors also posting positive gains.

Within the Services sector, most subsectors registered expansion, although Utilities and Finance and insurance saw slight declines during the quarter.

Productivity And The Economic Picture For Malaysia

Labour productivity measures how efficiently labour is used to generate output. When productivity rises alongside employment growth, it generally signals that businesses are producing more value without a proportional increase in workforce size or hours worked.

From a household perspective, sustained productivity growth forms part of the foundation for long term income improvement. Higher productivity can strengthen corporate performance and competitiveness, which may support job stability and future wage growth. However, productivity gains do not automatically translate into higher wages, as wage outcomes also depend on labour market conditions, company costs, and economic policy.

For businesses, improved productivity can help manage operating costs and maintain margins, particularly during periods of rising input prices.

What The Latest Figures Indicate

The fourth quarter data suggests that Malaysia’s economic expansion in late 2025 was accompanied by improved efficiency across most sectors. Output growth outpaced increases in employment and hours worked, indicating stronger value creation per worker rather than growth driven solely by hiring.

When productivity rises in this way, it generally signals that businesses are generating more output from existing resources, whether through better processes, stronger demand, technological adoption, or improved workforce skills. This type of growth is typically viewed as more sustainable than expansion that depends only on increasing labour input.

If sustained, higher productivity can strengthen overall economic resilience by improving competitiveness and supporting investment flows. For households, this broader stability can influence job security, wage dynamics, and longer term income prospects, particularly in sectors that are recording stronger gains.

The Department of Statistics Malaysia noted that labour productivity is expected to maintain positive momentum in 2026, supported by a stable labour market and continued economic performance. Continued gains would reinforce the role of productivity as a key driver of Malaysia’s medium term growth outlook.

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