Labour Force Participation RateClick here for detail indicators
Why LFPR is important?
The labour force participation rate (LFPR) is a measure of the proportion of the working age population in Malaysia who are employed or actively looking for gainful employment. At any point in time in Malaysia, the working age population is defined to be all persons between the ages of 15-64 years old. The LFPR thus provide information on the size of the labour or work force available to engage in productive activities in the economy. The workforce at any point in time is composed of persons who are employed and those who are unemployed, including those looking for employment for the first time or in transition between jobs. In general, the working age population who are not in the labour force are those persons who are in learning or training institutions; those who are retired and have no intention of rejoining the labour market; those who are physically or mentally or health-wise unable to work and those who are otherwise not actively looking for work. The workforce can also be separated by gender, age cohorts and other analytical groups. The workforce and working age population includes Malaysian and non-Malaysian citizens. The LFPR is expressed in percentage and is derived as follows:
The data for estimating the LFPR is captured through the Labour Force Survey conducted periodically by the Department of Statistics Malaysia (DOS) using the household survey methodology.
Why LFPR is important?
LFPR plays a central role in determining the size and composition of the workforce as well as contributing to projecting the future labour force. The variety of profiles that can be generated using this indicator is very helpful for understanding the labour market behaviour of different categories in the population, for example by gender, age group, strata, state and more. LFPR is also crucial in formulating employment policies as well as training needs in efforts to raise the participation rate in the labour market.
Though LFPR is one of the main indicators of the labour market, there are some limitations to analysing the data. The LFPR data are obtained from household surveys which are designed to reflect the specific characteristics of Malaysia. Over time as seen in the indicators above, definitions and coverage may change as the demographic and economic characteristics of the country evolve. Thus great care must be taken when comparing indicators across time and analytical groups to take into consideration variations in concepts and methodologies. This is especially the case when benchmarking against the development in other countries. Labour force data may vary from one country to another, depending on the type of questions asked and the coverage in the survey questionnaires. Moreover, much of the information collected reflect activities in the formal sector of the economy, while there may be important informal activities which may be judged significant enough for consideration and thus need to be captured in the analysis.
For the future there are plans to further disaggregate and analyse the LFPR indicator and undertake additional research to collect evidence to explain the changes and trends observed in this indicators. In particular, further information and understandings are needed to support purposeful efforts to increase the female LFPR in general and to encourage them to remain within the workforce for longer. ILMIA will work with Talent Corporation and the Ministry of Women, Family and Community Development in this endeavour. The Ministry for Women has introduced initiatives for flexible working arrangement for women called “flexWorkLife.my”. This initiative aims to create better connection between employers and employees to optimise work-life balance as well as maximising work efficiency. It also offers many appealing benefits that should help to boost the female participation in the labour market moving forward.
There are also plans to undertake further work to better understand not only the LFPR for youth but also other labour market indicators focussed on the young population, e.g. KILM 10.