Malaysia’s unemployment rate to remain elevated
KUALA LUMPUR: Malaysia’s unemployment rate forecast has been maintained at four per cent this year, with analysts observing that unemployment will remain high over several months.
According to the Department of Statistics Malaysia (DOSM), the unemployment rate continued to fall in July 2020 to 4.7 per cent after recording 4.9 per cent in June 2020.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) gathered this was a result of more businesses reopening and resuming its operations.
However, it said: “The unemployment is still on a high note as firms are yet to resume operations at full capacity and challenged by the need to comply and adjust to the new normal.
“In particular, tourism-related sectors such as aviation and hotel could not operate at full capacity due to closure of international borders. A recovery path in the labour market will be more evident in upcoming months as businesses adapt to the new normal, adhering to the Standard Operating Procedure (SOP) issued by the government as part of initiatives to contain the spread of Covid-19 cases.”
Looking ahead, MIDF Research maintained its forecast for the unemployment rate at four per cent for the year, with unemployment to remain high over several months.
The research arm noted that some companies may have to resort to retrenching its employees to manage operating costs due to concerns over less encouraging revenue moving forward as overall economic activities will take time to fully recover.
“With activities in the economy gradually restarted and began to pick up, measures taken by government through stimulus packages such as wage subsidy, employment insurance scheme and reskilling and upskilling initiatives will support employment to be more stable in the second half of 2020 (2H20).
“In addition, recovery in the international trade and the manufacturing sector will further support the job market, given the involvement of Malaysia in the global supply chain.
“However, once the subsidy and wage programmes expire, this may pose as downside risks to the labour market outlook.”