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Impact of Labour Participation Rate on Urbanization


labour force participation rate in Malaysia

Due to rapid modernization, Kuala Lumpur has undergone a lot of economic as well as social changes. In other words, this shift instigated a spatial re-distribution brought about by migration, which was attracted by the growth rate and urbanization rate (Yasin, Zain, Haniff, & Hassan, 2022). These migrations promoted a steady and balanced labour force participation rate in Malaysia, Kuala Lumpur. The labour participation rate indicates the number of people within the labour force as a percentage of the current working-age population; in other words, it shows the sum of the number of individuals employed to those unemployed. The shift of old age employees who exited the labour market to pave the way for the young but unemployed generation maintained the labour participation rate. In 2016, the workforce support rate for Kuala Lumpur was 68.1 %. However, Kuala Lumpur’s workforce support rate has varied significantly as of late; it would, in general, diminish through the 2011 – 2016 period finishing at 68.1 % in 2016; this fluctuation was a result of urban-urban migrations since people opted to move to more urbanized cities.

Nonetheless, it has managed to maintain the stability of 69.3 since the beginning of this year (Singaravelloo & Salih, 2022, p 244). Thus, in response to the migration causing an imbalance in growth, various government measures were put in place to restructure society for a more balanced development. One of the most effective measures was the diversification of industrial and manufacturing plants and converting and making Kuala Lumpur into a global city, acting as the centre point of Malaysia’s economy and an access point of Malaysia to the rest of the world.

Consumer Spending in Kuala Lumpur

Consumer spending is the amount of money an individual spends on products and services within the market. In this case, the spending covers durable goods, such as electronic appliances and nondurable goods, such as education. In the past 20 years, consumer spending has been increasing gradually from MYR 143342 million in 2003 to MYR 422452 million in 2022. Nonetheless, there was a decrease from MYR 422452 million to MYR 231225 million in 2023. Consumer spending decreased due to the economic recession that has been happening worldwide; most businesses in the city have been facing closure due to hardship in operations and closure of most businesses, making most households have difficulty making an income. Therefore, this is because of turnovers and layoffs due to downsizing and winding up businesses due to tough financial times.

The unemployment rate in Kuala Lumpur

The unemployment rate indicates the percentage of the labour force that is unemployed and is actively seeking work in the job market. The unemployment rate has been fluctuating from 2003 to 2023; in 2003, the rate was at 3.61% to 4.61% in 2021, then 3.6% and 3.5% in 2022 and 2021, respectively. From 2019 to 2020, the unemployment rate increased due to layoffs that were done as a result of covid- 19 pandemic. In addition, other employers adopted a part-time and rotation of work policy to allow every employee to work and earn part of their income. With stability in the market post covid and laying down appropriate measures, employees could go back to work, causing a decline in the unemployment rate in the year 2020 to the year 2021.

Foreign direct investment rate in Kuala Lumpur

Foreign Direct Investment indicates the amount of investment made by an individual or a company from one county to another. Foreign Direct Investment (FDI) inflow gives emerging nations admittance to capital that would otherwise not be accessible. FDI additionally gives genuinely necessary for foreign markets to grow and, in this manner, assists with changing a portion of the macroeconomic discrepancies crippling developing nations (Wong, Fai, Yee, & Cheng, 2019). With the rise in globalization and the need for integrated global economies, the measure of FDI in Malaysia has fluctuated occasionally. Though not impressive, the FDI of Kuala Lumpur has experienced a fluctuating rate of FDI characterized by both decrease and increase in various years. Malaysia opened up its borders allowing trade with neighbouring countries. As a result, it helped promote bilateral trade deals between the countries, as seen between them and China.

Kuala Lumpur GDP

Gross domestic product is a proportion of a Country’s financial performance. It is the whole worth of products and services created and rendered inside a nation’s boundaries throughout a predetermined period, usually a year. Malaysia’s varying growth rate in GDP can be attributed to various factors. First is trade openness; by opening up its borders, Malaysia has attracted new investors and allowed for dumping, which has also affected its growth. Moreover, the government has also pumped funds by expenditure on development which has helped form fixed capital for businesses. Nonetheless, the fluctuation in growth results from the inflation rate in the economy, making it hard for steady growth.

Crime Rate

Crime rate indicates the number of criminal activities and rate of occurrence within a particular area within a specified period. In addition, the crime rate is expressed in ratio format about the population size. In other words, Crime rates are used to gauge public safety in a region and make comparisons of crime levels in different places within the city. The crime rate has gradually increased from 2.07 per 100,000 to 2.13 per 100,000. According to the inspector general of police, there was an increase in criminal cases from 2021, 50,819 cases 52, to 982 cases in 2022. The rise in crime rate has been a result of increased economic activity; with increased investment, the growth of the urban sector influenced rural-urban migration, which promoted an increased crime rate since not all migrants were able to secure jobs.

Literacy Rate in Kuala Lumpur

The adult literacy rate is the level of individuals ages 15 or more who can both peruse and compose with figuring out a short, straightforward explanation about their daily lives. Literacy rates are ordinarily expressed as percentages and are frequently utilized as signs of a country’s education accomplishment and level of advancement in knowledge within a country or region. As additional individuals get an education at the university level, Malaysia’s proficiency rate has improved significantly. Between 2010 and 2021, the literacy rate was highest in 2010, standing at 98.42%, and the least was recorded in 1980 at 69.52%. The Literacy rate came to 95.71% in 2021. Between 2010 and 2021, the education pace in Malaysia diminished by 2.74%. On a year-on-year premise, the education rate diminished by 0.40% in 2021. In this case, one of the reasons was new dropout cases due to difficulty in households maintaining the provision of basic needs to other needs like education.

Population density

Population density is the number of people residing in a particular place. In addition, population density is recorded and expressed as the number of people per unit of land to help understand the circulation and changes in population (Ganasegeran., Jamil, Ch’ng, Looi, & Peariasamy, 2021). Kuala Lumpur is a global city in Malaysia; the urbanization rate has promoted migration from local towns to Kuala Lumpur to seek employment. Similarly, infrastructural and social amenities available in Kuala Lumpur have also been one of the most attractive factors, making people move, for instance, to good schools and hospitals. On the other hand, Malaysia supports a lot of migrants from various countries with work or school permits, increasing the population significantly.

Consumer Price Index in Kuala Lumpur

The consumer Price Index (CPI) gauges the typical change in costs paid by purchasers for a bushel of labour and products over the long haul. CPI is determined by averaging the cost vacillations for everything in a predetermined bin of goods and services. The Consumer Price Index in the period starting January 2023 eased to 3.7% from 3.8% in December 2022. In a released statement, Statistical Analyst Datuk Sri Dr Mohd Uzir Mahidin said the expansion in Malaysia’s CPI in January 2023 was driven by the hotel and restaurant business which contributed to (6.8%); on the other hand, food and non-alcoholic drinks were at (6.7%) whereas, transportation stood at 4.0%. Due to rapid development, Kuala Lumpur has been an economic hub in Asia. Thus, it has attracted many investors and tourists, making the hotel and restaurant businesses thrive.

Real interest rate

The Nominal is adapted to expand to create or generate accurate interest rates. Real interest rate addresses a financial investor’s buying power since it considers inflation rates, which lessens the worth of the cash over the long haul. The real interest rate of Kuala Lumpur has changed a ton in the past 20 years. For instance, based on provided data, one can note remarkable changes attributed to sharp incrementing from the year 2017 to the year 2018, 0.8 to 4.3, and from 2011 to 2012, from -0.5 to 3.7.


Ganasegeran, K., Jamil, M. F. A., Ch’ng, A. S. H., Looi, I., & Peariasamy, K. M. (2021). Influence of population density for COVID-19 spread in Malaysia: an ecological study. International Journal of Environmental Research and Public Health18(18), 9866. Retrieved from

Singaravelloo, K., & Salih, K. (2022). Cities, Urbanization and Infrastructure. In Malaysia’s Leap Into the Future: The Building Blocks Towards Balanced Development (pp. 237-263). Singapore: Springer Singapore. Retrieved from

Wong, M. F., Fai, C. K., Yee, Y. C., & Cheng, L. S. (2019). Macroeconomic policy and exchange rate impact foreign direct investment in ASEAN economies. International Journal of Economic Policy in Emerging Economies12(1), 1-10. Retrieved from

Yasin, M. Y., Zain, M. A. B. M., Haniff, M., & Hassan, B. (2022). Urbanization and growth of Greater Kuala Lumpur: Issues and recommendations for urban growth management. Retrieved from


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