Labour market outlook may be temporarily affected by targeted MCO
KUCHING: The labour market outlook could be temporarily affected by the targeted Movement Control Order (MCO) in selected areas amid concerns over rising Covid19 cases, analysts opine, but recovery is still within current expectation.
However, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) maintained its projection for the unemployment rate to average at 4.3 per cent this year, a slight decline from 4.5 per cent in 2020.
“Taking into account the improvement in the labour market condition in March 2021, the recovery thus far is still within our current expectation,” MIDF Research said.
The research arm recapped that Malaysia’s unemployment rate fell to 4.7 per cent in March 2021, as the labour market continued to improve following the end of the MCO 2.0.
With the end of MCO 2.0, MIDF Research expected the labour market will continue to recover which will be further supported by government initiatives such as wage subsidy programme, grants and microcredit to small businesses, PenjanaKerjaya hiring incentives and MySTEP short-term employment in the public sector.
“Looking ahead, we foresee labour market outlook could be temporarily affected by the targeted MCO in selected areas amid concerns over rising Covid19 cases.
“Despite the tighter restrictions, the impact may be less severe as businesses are allowed to operate abiding by the strict standard operating procedures (SOP).
“However, hiring in the consumer-oriented services sectors may be impacted as consumer spending may be constrained by the limited mobility.”
MIDF Research anticipated that the impact from the targeted MCO in selected areas will mainly affect domestic spending at least in the near term; the overall impact on growth will not be very significant as activities in other areas and business operations are generally allowed to continue.
“While vaccine rollout is expected to be a sentimentbooster, a slow progress in the Covid-19 vaccination amid rising Covid-19 infections may result in a weaker recovery in economic activities which could hamper the job market recovery.”