The Pan-Malayan Labour Party was founded in Kuala Lumpur, marking a significant development in the political landscape of Malaya. It arose during a period when trade unionism and workers' rights were gaining prominence in the post-World War II era. Various state-level labour parties had been advocating for workers' rights, but a unified national platform was deemed necessary to enhance their bargaining power and influence on legislative matters. The conference that led to the formation of the party brought together representatives from different regions, highlighting the unity among the diverse workforce in Malaya, which comprised various ethnic groups including Malays, Chinese, and Indians.

During the founding conference, crucial discussions were held about addressing labor conditions, wage disputes, and the importance of collective bargaining. The party aimed to unite the fragmented labor movements to effectively lobby for improved labor laws and protections. This was particularly vital at a time when the economy was under strain and the working class faced numerous challenges, including exploitative practices and insufficient wages. The Pan-Malayan Labour Party was seen as a response to these challenges, representing the collective demands of the labor force.

In the lead-up to its formation, the socio-political context in Malaya was dynamic, with rising nationalist sentiments that were also influencing labor rights. The establishment of the Pan-Malayan Labour Party was not only a labor movement but also intertwined with the broader nationalist movements seeking more substantial representation and rights against colonial authorities. The party symbolized a shift towards organized political action among workers in Malaya, framing labor rights as an essential part of the fight for independence and social justice.