PUTRAJAYA (July 29): Malaysia’s nominal gross domestic product (GDP) expanded 4.8% to RM2.03 trillion in 2025 with compensation of employees (CE) accounting for 33.9% of GDP, up from 33.6% in 2024.

The Department of Statistics Malaysia (DOSM) said CE grew 5.8%, outpacing overall economic growth and resulting in a higher share of employees’ compensation in GDP.

“Gross operating surplus (GOS), which represented 62.0% of GDP, recorded growth of 2.1%, while net taxes surged 53.7%, lifting its contribution to 4.1% of GDP,” it said in a statement Wednesday.

The department said the increase in CE in 2025 was in line with improvements in labour market performance with employment increasing by 1.3% and labour productivity per employment expanding by 4.0%.

It also said the revision of the minimum wage to RM1,700 and the implementation of the Public Service Remuneration System or SSPA also contributed to higher compensation of employees during the year.

By sector, CE in the services sector rose 6.2%, with increases recorded across all sub-sectors, particularly wholesale and retail trade, food & beverages and accommodation.

The construction sector recorded an increase of 11.4%, followed by the manufacturing sector with growth of 2.5%, mainly supported by non-metallic mineral products, basic metal and fabricated metal products activities.

Meanwhile, CE in the agriculture and mining & quarrying sectors grew by 6.5% and 3.2%, respectively. The services sector accounted for the largest share of CE at 62.6% of the total in 2025, in line with its largest share of employment.

The manufacturing and construction sectors contributed 21.8% and 9.5% respectively, while the agriculture and mining & quarrying sectors accounted for 3.9% and 2.3% respectively.

The growth of GOS was primarily driven by the services (5.2%), agriculture (5.0%) and construction (2.1%) sectors. In contrast, GOS in the manufacturing and mining & quarrying sectors declined by 0.5% and 11.0% respectively.

DOSM said net taxes amounted to RM83.5 billion in 2025, mainly due to higher tax revenue and lower subsidies.

“Taxes on production and imports expanded by 12.9%, supported by higher collections from services tax and import duties, while subsidies declined by 36.5% following the implementation of the fuel subsidy rationalisation measures,” it shared.

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