KUALA LUMPUR, April 11 — Kenanga Investment Bank Bhd expects the labour market to gradually recover in 2022, underpinned by a higher vaccination rate, relaxation of pandemic-related restrictions, reopening of borders, and various policy support measures.
Thus, the research house has retained the unemployment rate forecast at 3.9 per cent this year compared with 4.6 per cent in 2021.
“Nonetheless, the downside risks remain associated with the potential surge of Covid-19 cases brought by the new variant, the Russia-Ukraine crisis and China’s economic slowdown due to its zero-Covid policy.
“Against these backdrops, we expect the unemployment rate to settle at 3.9 per cent in 2022,” it said in a note today.
The research house said the unemployment rate inched down to 4.1 per cent and total unemployment decreased to 671,800 persons in February compared with the unemployment rate of 4.2 per cent and total unemployment of 680,400 in January.
Unemployment in February was the lowest since March 2020 and almost reaching the pre-pandemic level.
Total unemployment month-on-month eased 1.3 per cent in February versus -1.0 in January, declining for seven straight months and at the fastest pace since November 2021, reflecting a continued recovery in the labour market, underpinned by the relaxation of pandemic restrictions amid a higher vaccination rate.
Meanwhile, AmBank Research sees structural challenges and a decreasing number of employed persons in certain sectors although positive factors such as the reopening of international borders and the government’s initiative will further support recovery in the labour market.
It said by sector, there was more employment in the services sectors, particularly food and beverages; wholesale and retail; and transportation and storage; but the agriculture; and mining and quarrying sectors continued to record a reduction in employment.
“Employment in agriculture is expected to recover at a slower pace. This is because the reliance on foreign workers is still high while the adoption of automation remains low,” it said in its research note.
The research house said despite foreign workers being allowed to return to Malaysia, the approval rate is still low — sectors affected are plantation, construction and selected manufacturing sectors.
“Overall, we expect the unemployment rate in Malaysia to decline to 3.9 per cent in 2022, below Bank Negara Malaysia’s expectation of 4.0 per cent,” it said.