Labour market improving but analysts still cautious
KUCHING: Malaysia’s labour market conditions improved in February but analysts are still wary on the impact of the pandemic and the possibility of a new wave of Covid-19 infections which may weigh on business and consumer sentiments.
Malaysia’s unemployment rate fell to 4.8 per cent in February 2021 (January 2021: 4.9 per cent), as the labour market improved despite the extension of Movement Control Order (MCO) 2.0 to control the record increase in Covid-19 cases.
According to a report by Hong Leong Investment Bank Bhd’s research team (HLIB Research), employment rose by circa 33,300 persons or 0.2 per cent monthon-month (compared with 21,900 persons or up 0.1 per cent m-o-m in January).
Sectorial wise, it said, the services sector continued on its upward trend, predominantly in ‘wholesale & retail trade’, ‘education’ and ‘human health & social work’ activities, while employment remained weak in tourism-related industries, as expected. Manufacturing and construction sectors also contributed to employment growth while agriculture and mining & quarrying sectors recorded reductions in the number of employed persons. In terms of status of employment, the share of own account workers increased to 15.9 per cent (15.7 per cent in January), while the number of employed persons who were temporarily not working declined to 150,800 persons (158,900 persons in January) as mobility restrictions eased.
“Although there have been improvements in labour market conditions, the pandemic could still have scarring effects on the labour market.
“The share of actively unemployed persons without a job for more than one year has been rising, reaching 11.3 per cent in February from 6.4 per cent in April 2020, when MCO first began,” HLIB Research opined.
Nevertheless, there is some cause for optimism as economy reopens and vaccination programme advances.
“According to a job and recruitment agency, Michael Page’s Talent Trends 2021 report, it found that about a third of Malaysian employers are looking
Although there have been improvements in labour market conditions, the pandemic could still have scarring effects on the labour market.
HLIB Research
to increase headcount in 2021, especially in technology and fintech, global services/shared services centres, fast moving consumer goods, healthcare and manufacturing,” it said.
Meanwhile, the research team at Kenanga Investment Bank Bhd (Kenanga Research) opined, “While the domestic labour market shows signs of improving, the downside risk remains as fears of a new wave of COVID-19 infections may weigh on business and consumer sentiment going forward.”
Nonetheless, it also highlighted that the relaxations of movement restrictions as more economic activity were allowed to resume operation, as well as various ongoing policy support and progress of the inoculation campaign, is expected to limit the adverse effect of the pandemic. MIDF Amanah Investment Bank Bhd’s research team (MIDF Research) pegged a more optimistic view on Malaysia’s market as it expected the improvement in the labour market condition to continue in the coming months.
It maintained its forecast for jobless rate to an average of 4.3 per cent.
“With the continued recovery in the job market, despite the ongoing MCO 2.0 in February 2021, we expect the improvement in the labour market condition will continue in the coming months.
“This will be supported by a better business environment as the restrictions from movement control has been gradually relaxed and more businesses are allowed to resume operations.
“Sentiment is expected to improve as the government pledged not to impose nationwide MCO and adopt a more targeted intervention measure going forward.
“Moreover, the ongoing vaccination programme and the declining Covid-19 cases will also boost confidence and will result in improving hiring plans by local businesses.
“Support from the government’s assistance packages such as the extension of wage subsidy, grants and microcredit to small businesses, incentives for recruitment and MySTEP employment programme will also improve employment outlook this year,” it said.
Overall, it said it maintained forecast that the unemployment rate will continue to decline on a gradual basis to an average of 4.3 per cent this year (4.5 per cent in 2020), and therefore above the pre-pandemic levels.