Trying to venture out to do your own small business? Or do some freelance work? Here’s what you should know about the informal job market.

Mention the informal job market; people will give you sideway glances of confusion and apprehension. The first thought that comes to mind is the difficulty of earning any money from it, and you would have to be really struggling to go into it.

While that may be true to some extent, attitudes are changing. More and more Malaysians regard having their own business or gig as something to strive for these days, better than working for other people.

The informal job market can simply be thought of as businesses that are typically small and not registered with the government. Think of the stall seller in the market, the side of the road, or freelancers writing that article for you now.

Here are 6 important facts that you need to know about the informal job market in Malaysia. Some of it could help you during times of financial hardship.

Our Data

The data used in this article originates mainly from Department of Statistics Malaysia (DOSM) publication on the informal sector in Malaysia. It has data on the number of jobs estimated in the informal sector, with breakdowns by gender, urban/rural, type of workers, sectors, and many other details from 2013 to 2021.

#1: Many Malaysians Depended on Jobs in the Informal Market During the Pandemic

The informal job market has and always been a fall back for many Malaysians throughout the years when things got hard in the economy. This was no different during in 2020 and 2021 when Covid caused much turmoil in Malaysia.

Between 2019 and 2021, there was about a 200,000 increase in unemployed Malaysians. Guess where most of the workers who lost their job went to? That’s right. The number of informally-employed Malaysians increased by about 46,000 to 1.3 million during the same period.

For most of us, the prospect of losing a job during hard times is just downright daunting. Luckily enough, there are still jobs in the informal market that we can rely on to support ourselves for the time being or it could even turn into a real job that could earn you much more money.

#2: Informal Jobs are Mostly in Cities

When it comes to where you can find informal jobs, the first thing that comes to mind is going outside of the city to get them. However, that is further away from the truth.

In 2021, about 73.7% of informal jobs were in the urban areas in Malaysia. Informal jobs were actually at its highest in 2017 at about 1.1 million compared to about 960k in 2021.

It just goes to show that for many people living in the cities, the informal job market is all around you. You don’t have to go to somewhere so remote to access the informal job market to support yourself.

#3: Informal Workers Worked Longer Hours During the Pandemic

This was a boon for many people who lost their jobs and in the informal market during the pandemic. Before this, current informal workers always faced irregular and inconsistent working hours, which meant their income was also uncertain. If anything, this factor was a major contributor to people shunning the informal job market.

The average hours worked per week by informal workers increased to 41.4 hours in 2021 from 38.9 hours in 2019. In many cases, an increase of 2.5 hours of working and wages could mean the difference between starving and having enough food for the family.

For many of the people who lost their jobs, this increase in working hours also means that there are more work to be found in the informal market. More opportunities are actually showing up in the gig economy where Malaysians can now ply their trade through freelancing opportunities.

#4: Most Jobs are in the Services Industries

If you are wondering where can you most easily find informal jobs, they are mostly in providing services. Services jobs consist of about 67.0% of total jobs in 2021, and that percentage has been on an increase since 2013 (63.9%).

Within the services sector, most of it are in the wholesale and retail trade, repair of motor vehicles and motorcycles industries at about 24.0% of total jobs. Wholesale and retail trade are the usual brick-and-mortar stores that you see from shophouses or shopping malls, or stalls that you see in the morning and night markets.

The rest of the informal jobs are concentrated in the manufacturing (19.1%) and construction (13.4%) sectors. If you are looking for a job in the informal sector, be ready to accept that most of the jobs will be in the services sector.

#5: There are Actually More Young Workers in the Informal Job Market

It seems like the younger generation is embracing the unpredictable but exciting informal job market. Attitudes are changing as having a stable, cushy office job and wait for retirement is no longer the dominant ambitions of young working adults.

Workers aged from 15 to 34 make up about 44.0% of informal jobs in 2021 –  a full 4.0% increase in just two years. Even though there are still more young men, the number of young women informal workers have gone up more in this period at around 43,400 compared to young men (25,900).

#6: Selangor, East Malaysia, and Johor had the Most Informal Jobs

If you are having a hard time thinking on which states to find an informal job, look out for states which are close to you. However, if you are fine to relocate, these states in Malaysia would have the most informal jobs.

The first is Selangor. It has about 25.0% of the total informal jobs in Malaysia, being one of the key hubs for Malaysia’s services and manufacturing industries. East Malaysia (Sabah and Sarawak) comes in second at about 19.0%, so it’s not at all necessary to pack up and move to West Malaysia. Coming in at number 3 is Johor at 10.5% of total jobs, and with its close proximity to Singapore, you can even consider plying your trade there.

Conclusion

The informal job market is a very viable alternative job market to the main one. It serves as a key building block of Malaysia, and supports Malaysians who for various reasons cannot get any employment in the main job market. Use these knowledges about the informal job market to help you on your career or financial journey!

 

Tell us about your experience in the informal job market in the comments below!

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