Digital economy, automation to impact labour market — Analysts

KUALA LUMPUR: The digital economy and automation is projected by the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) to impact the labour market, with the former expected to contribute about 20 per cent to the gross domestic product (GDP) by 2020.

According to MIDF Research, the unemployment rate in January rose slightly to 3.4 per cent from 3.3 per cent in the December 2017.

“The total number of unemployed in January stood at 516,500 people, up 10,700 from December’s reading,” it noted.

MIDF Research believed the slight increase in the unemployment rate was due to lower net jobs created in January and higher labour force participation.

“Net jobs created in January was 30,400. It is equivalent to 49.7 per cent and 33.7 per cent of the net jobs created in December 2017 and January 2017 respectively.”

The research arm added that the labour force participation rate rose marginally in January to 68.2 per cent from 68.1 per cent in December or up 0.2 per cent month on month (m-o-m) and 2.1 per cent year on year (y-o-y) to 15.187 million people.

Meanwhile, MIDF Research noticed the number of people outside of the labour force (housewives, students including those going for further studies, retirees, disabled persons and people seeking employment) dropped marginally by 0.1 per cent m-o-m to 7.07 million people in January, accounting for 31.8 per cent of the working population.

“With the economy poised to grow at a 5.5 per cent in 2018 from 5.9 per cent in 2017, we should see the labour market remaining firm.”

MIDF Research projected the unemployment rate to hover around 3.2 per cent to 3.3 per cent in 2018 from 3.3 per cent in 2017.

“Some stickiness is envisaged in the labour market. It is due to the growing digital economy which is expected to contribute about 20 per cent to the GDP by 2020.”

MIDF Research highlighted that individuals at all levels will need to actively develop their skills, stay relevant and not challenge the current changing trends in their respective sectors.

It further highlighted that the reason being, many sectors are being reshaped by technology, creating new roles and also different demands for those in existing jobs.

“Besides, automation is also impacting the labour market. Failing to do so will potentially affect the labour market data with the unemployment rate expected to inch up to around 3.4 per cent to 3.6 per cent.”