Sabah Employment 2026 — Labour Force & Wage Data

A labour market under pressure

Sabah\u2019s employment situation is the weakest of any Malaysian state. Unemployment at 7.6% is more than double the national average. Wages are the lowest or near-lowest in the nation. Youth joblessness is a crisis, with 13.2% of young people out of work. Meanwhile, the state relies on ~450,000 registered foreign workers (estimates of undocumented workers reach several million), creating a two-tiered labour market where migrant workers compete fiercely for low-wage jobs.

This situation reflects Sabah\u2019s economic structure: the state\u2019s economy is built on resource extraction (oil, gas, palm oil) and low-value-added agriculture. These sectors provide employment but not high-quality jobs. Manufacturing — which drives higher wages in Peninsular Malaysia — is weak in Sabah. Services are growing but are concentrated in tourism and hospitality, which offer seasonal and low-wage work. A skills gap between employer needs and labour supply compounds the problem.

Employment by sector

Sabah\u2019s labour force is distributed across six broad sectors. Services (retail, hospitality, government) is the largest, followed by manufacturing and agriculture. These proportions reflect Sabah\u2019s economy: still partly resource-based, increasingly service-oriented, but lagging in manufacturing compared to Selangor or Johor.

The big employers

• Palm oil plantations: ~200,000 workers; mostly immigrant labour; wages RM1,200\u2013RM1,500/month.
• Government & civil service: ~150,000 workers; highest wages (RM2,500\u2013RM3,500); most secure employment.
• Retail & hospitality: ~200,000 workers; wages RM1,200\u2013RM1,800; high turnover.
• Oil & gas: ~15,000 direct workers; wages RM2,500\u2013RM5,000+; but declining as operations mature.
• Construction: ~80,000 workers; wages RM1,400\u2013RM2,000; heavily dependent on foreign workers.

Wages by sector and the wage gap

Wage variation by sector is extreme. Public sector workers earn more than double what agricultural workers earn. Services-sector workers (retail, hospitality) fall in the middle. This wage ladder has equity implications: workers in inherited or colonial-era sectors (government, oil) do well; workers in emerging sectors (services) do less well; and workers in traditional sectors (agriculture) are left behind.

The youth unemployment crisis

Young Sabahans (15\u201324 years) face a grim job market. At 13.2% unemployment, they are more than 50% more likely to be jobless than the overall population. Many have secondary or vocational qualifications but lack the specific skills employers demand. Employers report needs for IT, digital marketing, technical trades, and customer service — but schools and training institutions are slow to adapt. The result is frustrated young people stuck in underemployment, gig work, or dependency on families.

Youth out-migration from Sabah is a consequence. Young Sabahans with ambition seek work in Peninsular Malaysia, especially Kuala Lumpur and Selangor, where job options and wages are both higher. This contributes to Sabah\u2019s brain drain and limits entrepreneurship and innovation.

Foreign workers and labour market dynamics

Sabah\u2019s economy is deeply dependent on foreign labour. Registered foreign workers number ~450,000, with estimates of undocumented workers reaching 2\u20133 million. They dominate in:

• Palm oil plantations: 80\u201385% of the workforce.
• Domestic service: ~90% migrant (mostly female, from Philippines and Indonesia).
• Construction: 50\u201360% migrant.
• Fishing: 40\u201350% migrant.

Foreign workers compete fiercely for low-wage jobs, depressing wages for local unskilled workers. A local worker in construction faces direct competition from migrant workers willing to earn RM1,000/month; employers naturally hire the cheaper labour. This effect is less severe in skill-demanding sectors (manufacturing, professional services) where locals have an education advantage.

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