Kuala lumpur: Malaysia's nominal Gross Domestic Product (GDP) increased by 4.8 per cent to reach RM2.03 trillion in 2025, with Compensation of Employees (CE) rising to account for 33.9 per cent of GDP, marking an increase from 33.6 per cent in 2024.

According to BERNAMA News Agency, the Department of Statistics Malaysia (DOSM) reported a 5.8 per cent growth in CE, surpassing the overall economic growth and resulting in a higher share of employees' compensation in GDP. Gross Operating Surplus (GOS), which made up 62.0 per cent of GDP, saw a growth of 2.1 per cent, while net taxes increased by 53.7 per cent, raising their contribution to 4.1 per cent of GDP.

The DOSM attributed the rise in CE in 2025 to enhancements in labor market performance, with employment rates increasing by 1.3 per cent and labor productivity per employment growing by 4.0 per cent. The revision of the minimum wage to RM1,700 and the implementation of the Public Service Remuneration System (SSPA) were also significant contributors to the increase in employee compensation.

By sector, the Services sector experienced a 6.2 per cent rise in CE, with all sub-sectors showing increases, particularly in Wholesale and retail trade, food and beverages, and accommodation. The Construction sector recorded a notable growth of 11.4 per cent, while the Manufacturing sector grew by 2.5 per cent, driven mainly by activities in Non-metallic mineral products, basic metal, and fabricated metal products.

CE in the Agriculture and Mining and quarrying sectors grew by 6.5 per cent and 3.2 per cent, respectively. The Services sector held the largest share of CE at 62.6 per cent of the total in 2025, aligning with its largest share of employment. The Manufacturing and Construction sectors contributed 21.8 per cent and 9.5 per cent, respectively, with the Agriculture and Mining and quarrying sectors accounting for 3.9 per cent and 2.3 per cent, respectively.

The growth in GOS was mainly driven by the Services (5.2 per cent), Agriculture (5.0 per cent), and Construction (2.1 per cent) sectors, whereas GOS in the Manufacturing and Mining and quarrying sectors declined by 0.5 per cent and 11.0 per cent, respectively.

DOSM reported that net taxes reached RM83.5 billion in 2025, largely due to increased tax revenue and reduced subsidies. Taxes on production and imports grew by 12.9 per cent, supported by higher collections from services tax and import duties, while subsidies decreased by 36.5 per cent following the implementation of fuel subsidy rationalization measures.