Malaysia’s labour market to stay on expansion pace

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Malaysia’s labour market is expected to stay on expansion pace in tandem with industrial and external trade activities, analysts observed. — Photo by Chimon Upon

KUCHING: Malaysia’s labour market is expected to stay on expansion pace in tandem with industrial and external trade activities, analysts observed.

In a recent report on Malaysia’s labour market, the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) commented: “The stable labour market is expected to impact positively on the economy – supporting private consumption as it drives the domestic economy through growing consumer optimism.

“We predict the labour market to stay on expansion pace in tandem with industrial and external trade activities. We opine Malaysia’s jobless rate to remain under a full employment condition, with the unemployment rate of 3.3 per cent in 2019.”

It noted that Malaysia’s labour force grew by two per cent y-o-y, the strongest gain in three months while employment growth maintained at two per cent y-o-y, highest pace in four months with 45,200 jobs added in July 2019.

On the other hand, it noted that number of unemployed persons and outside of labour force rose by 1.2 per cent y-o-y and 2.3 per cent y-o-y respectively during the month.

“Nevertheless, Malaysia’s economy remains operating at full-employment condition as jobless rate is at low level of 3.3 per cent. Stable labour market is crucial for Malaysian economy as it provides solid support to the domestic demand,” it highlighted.

It noted that global trade uncertainties due to China-US trade war, dispute between Japan & South Korea and geopolitical stress in the European Union (EU) would impact Malaysia’s export-oriented industries especially manufacturing and eventually affect Malaysia’s employment numbers.

“Nevertheless, industrial activities are expected to remain on expansionary path due to, among others, strong domestic demand, OPR cut effects, easing monetary measures by developed & emerging markets and positive progression in construction activities.

“This will eventually translate into net jobs additions, stable wage growth and indirectly provide additional support to Malaysia’s domestic demand in 2019,” it said.

The research team also noted that Malaysia’s job vacancies continue to be dominated by low-skilled type of jobs.

“However, the share of elementary occupations to the total vacancies in June 2019 went down further to 64.8 per cent, the lowest since December 2016. The remaining 35.2 per cent are for medium and high-skilled jobs, particularly for Senior Officials, Professionals and Technicians.

“Moving forward, we believe the dominancy of low skilled jobs will gradually decline and that high-skilled jobs will increase as we expect re-exports performance will continue trending downwards amid higher base effects and slowdown in global market especially for E&E sector. “In addition, with the expected recovery in mining and agriculture goods, we expect domestic exports to continue its upward trend, offering more vacancies for medium and high-skilled jobs,” it said.

On a regional basis, MIDF Research said: “Moving forward, we view labour market in developed and emerging economies to remain at healthy level despite trade war and volatility in commodity prices.

“Accommodative fiscal and monetary policies and steady domestic demand are main factors supporting economic growth in both developed and emerging economies.”