PUTRAJAYA: Malaysia’s nominal Gross Domestic Product (GDP) expanded 4.8 per cent to RM2.03 trillion in 2025 with Compensation of Employees (CE) accounting for 33.9 per cent of GDP, up from 33.6 per cent in 2024.

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

"Gross Operating Surplus (GOS), which represented 62.0 per cent of GDP, recorded growth of 2.1 per cent while net taxes surged 53.7 per cent, lifting its contribution to 4.1 per cent of GDP,” it said in a statement today.

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

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 per cent, 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 per cent, followed by the Manufacturing sector with growth of 2.5 per cent, 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 per cent and 3.2 per cent, respectively. The Services sector accounted for the largest share of CE at 62.6 per cent of the total in 2025, in line with its largest share of employment.

The Manufacturing and Construction sectors contributed 21.8 per cent and 9.5 per cent respectively, while the Agriculture and Mining & quarrying sectors accounted for 3.9 per cent and 2.3 per cent respectively.

The growth of GOS was primarily driven by the Services (5.2 per cent), Agriculture (5.0 per cent) and Construction (2.1 per cent) sectors. In contrast, GOS in the Manufacturing and Mining & quarrying sectors declined by 0.5 per cent and 11.0 per cent 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 per cent, supported by higher collections from services tax and import duties while subsidies declined by 36.5 per cent following the implementation of the fuel subsidy rationalisation measures,” it shared. - Bernama