Labour market remains strong, low-skilled segment dominates
KUALA LUMPUR: Malaysia’s labour market has shown encouraging figures as of all in regards to this expansion and employment growth, but our low-skilled segment continues to dominate says analysts.
In an economic review report by the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), the research arm detailed that our labour market has remained strong with our labour force expanding by 2.1 per cent year over year (y-o-y) to 15.5 million in January 2019, while employment growth improved to 2.2 per cent y-o-y to 15 million as jobs added in the economy registered at 6,800.
Additionally, unemployment also saw a contraction of 0.2 per cent y-o-y but no sequential change for the last four months.
Overall, things have been looking on the up and up as growth in both our labour force and employment has been outpacing unemployment growth for the last 23 months since March 2017.
“The stable job market reflects healthy development of Malaysia’s economy and providing a solid fundamental factor for the economy particularly in supporting domestic demand,” detailed the research arm.
However, despite the encouraging numbers, in labour force expansion and employment growth, the fact of the matter is that low value-added jobs still continued to dominate Malaysia’s job vacancies.
“For instance, 77.6 per cent of job vacancies last year were for elementary occupation and 11.8 per cent for operators while left 10.6 per cent for medium and highskilled jobs.
“Prior the global financial crises in 2009, job vacancies for low-skilled jobs were less than 50 per cent.
“However, now in 2018, for every 100 jobs offered, 89 opportunities are for low-skilled, seven for medium-skilled and four for highskilled workers,” lamented the research arm.
On unemployment rates, MIDF Research is forecasting that the rates will average at 3.3 per cent in 2019, the same as in 2018.
Explaining their reasoning for this forecast, the research arm pointed out that the stable labour market is expected to impact positively to the economy via supporting private consumption as well as drive Malaysia’s domestic economy through the growing consumer optimism.
“We predict labour market to stay on expansion pace in tandem with industrial and external trade activities and opine Malaysia’s jobless rate to remain under a full- employment condition, with the unemployment rate of 3.3 per cent in 2019,” they stated.
On the other hand, the research arm of AmBank (M) Bhd (AmBank Research) believes that there is room for unemployment rates to reach 3.5 per cent in 2019.
The research arm sees upward pressure on unemployment as unemployment in January remained at 3.4 per cent with a low of 6,800 jobs added.
“The labour force participation rate stood at 68.6 per cent with manufacturing wages up 10.1 per cent year-over-year in December.
“In January, the unemployment rate remained at 3.4 per cent for the fourth consecutive month while the hiring pace slowed down, adding 6,800 jobs compared with 44,700 in December 2018.
“Looking at the informal sector, it rose 0.5 per cent y-o-y in January compared with 0.4 per cent in December.
“We noticed the trend of growth in this segment has been gaining since July 2018,” the research arm commented in a recent economics report.
“With a moderate domestic growth outlook at 4.5 per cent, there could be some upward pressure on unemployment in 2019. Room for unemployment to reach 3.5 per cent in 2019 from 3.3 per cent in 2018 remains high,” it said.
While AmBank Research’s forecast of a rising unemployment rate is rather worrying, MIDF Research reckons that the job market will remain stable globally as major and emerging economies have all shown encouraging fullemployment conditions.
For instance, the US unemployment rate is now at 3.8 per cent in Feb 2019 while the EU remains at 6.5 per cent – the lowest ever recorded rate since the creation of the union.
“Looking ahead, we foresee labour market will remain on healthy conditions globally as global and emerging economies’ manufacturing PMI remain on expansionary trend in Feb 2019, both at 50.6 points.
“Receding global trade tension, gradual pick-up in commodity prices and moderate inflationary pressure are among key contributing factors supporting global trade activities in 2019,” justified MIDF Research.
The stable job market reflects healthy development of Malaysia’s economy and providing a solid fundamental factor for the economy particularly in supporting domestic demand. MIDF Research