KUALA LUMPUR, May 8 — While unemployment hit an almost 10-year high of 3.9 per cent in March, MIDF Research foresees the country will maintain the state of full employment this year but with an upward tick to 3.8 per cent.
In its research note, MIDF said the unemployment rate was expected to breach the four per cent full employment condition in the coming months, but the job market would slowly recover as the government started to open up the economy and the fears surrounding Covid-19 began to subside.
“We opine the current external headwinds will affect the labour force even more in the second quarter of 2020 with the imposed movement control order (MCO) that has thundered many companies’, particularly small businesses.
“However, we are confident the jobless rate will remain below four per cent and operate at the full-employment condition for the whole year of 2020 as some of the stimulus measures announced by the government may moderate the pressure particularly on wage subsidy,” it said.
In addition, Malaysia’s steady performance in containing the virus would provide some positive sentiment, MIDF said.
Earlier today, the Department of Statistics Malaysia announced that unemployment rate jumped to 3.9 per cent in March, the highest since June 2010 (3.6 per cent), reflecting the negative impact of the MCO on the labour market.
In its report, MIDF noted that employment growth had plunged to an almost three-year low.
Malaysia’s employment growth in March 2020 decelerated to 1.3 per cent year-on-year (y-o-y) compared to 2.1 per cent y-o-y in February 2020 while the labour force moderated to 1.8 per cent y-o-y.
“This was the lowest recorded since December 2016. Unemployment increased further to 17.1 per cent y-o-y, resulting in an increase in its jobless rate to 3.9 per cent, after 28 months of being below the 3.5 per cent mark,” it said.
After the MCO was implemented in March 2020, many businesses ceased operation, resulting in higher unemployment. Nonetheless, the economy was still considered as under full employment condition, the research house noted.
Meanwhile, it said unemployment rate is at 3.8 per cent, and unemployment will maintain under state of full employment in 2020 but with an upward tick to 3.8 per cent.
On employment in the manufacturing sector, MIDF said growth was expected at a modest pace in 2020 due to the challenging external trade environment.
“This was mainly resulting from Covid-19 which has lowered demand for our exports and hence manufacturing production, given approximately 80 per cent of our exports are manufactured goods,” said the research house.
Nevertheless, domestic-oriented industries and commodity-based sectors may provide extra room for employment to grow as fears of Covid-19 wane and commodity prices recover.
“Moving forward, we view job market across developed and emerging economies to experience a slowdown in employment and rise in the unemployment rate in 2020 as the Covid-19 pandemic has halted operations causing disruption in the labour market with more businesses crumbling,” it added.
— Bernama
