2023 unemployment rate of 3.4 per cent expected to drop further in 2024
Malaysia’s average unemployment rate which settled in at 3.4 per cent in 2023 is expected to drop further in 2024 as analysts at Kenanga Investment Bank Bhd (Kenanga) are expecting the labour market to sustain its robust performance in the near-term and throughout 2024.
In an economic viewpoint report, Kenanga’s research arm (Kenanga Research) guided that they are now expecting the unemployment rate in 2024 to average at 3.2 per cent as they anticipate the stable job creation demonstrated in the recent months to be further bolstered by the technology upcycle and China’s gradual economic recovery especially in the second half of the year (2H24).
“Continued tourist arrivals and spending, as well as the ongoing progress of multiyear infrastructure projects by the federal government, are also expected to provide job opportunities,” they remarked.
Kenanga Research added that their current 3.2 per cent forecast for 2024 is a revision from their previous forecast of 3.3 per cent and the revision was prompted following the recent release of Dec 2023’s unemployment rate by the Department of Statistics Malaysia (DOSM).
To recap, the DOSM had announced on Feb 9 that the number of unemployed persons had dipped from 569,000 individuals in Nov 2023 to 567,800 individuals in Dec 2023, translating to the unemployment rate remaining unchanged at 3.3 per cent in Dec.
Actively unemployment individuals also fell during the month from 454,500 in Nov 2023 to 453,600.
Meanwhile the labour force participation rate inched up from 70.1 per cent in Nov 2023 to a record high of 70.2 per cent or 17.03 million individuals in Dec 2023.
This led to the overall 2023 average settling in at 3.4 per cent which was lower than Kenanga Research own in-house forecast of 3.5 per cent.
Kenanga Research guided that their new lower 2024 unemployment rate forecast also aligns with their own expectation of further economic improvements in Malaysia as they are projecting 2024 gross domestic product (GDP) growth to hit 4.9 per cent from the estimated range of 3.5 to 4.0 per cent in 2023.
Despite the more optimistic forecasts in 2024, the research stressed that certain structural issues in the labour market remain a key challenge in the coming year.
This includes a youth unemployment, individuals aged 15 to 24 years, continuing to sit at a high 10.6 per cent or 307,200 persons.
“Additionally, skill-related underemployment, defined as those with tertiary education and working in the semi-skilled and low-skilled categories, currently stands at 37.4 per cent, reaching a record high of 1.94 million in 4Q23,” the research arm added.