KUCHING: Malaysia’s unemployment rate will maintain under state of full employment in 2020 but with an upward tick to 3.8 per cent, analysts project.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) recapped that Malaysia’s employment growth in March 2020 decelerated to 1.3 per cent year on year (y-o-y) as compared to 2.1 per cent y-o-y in February 2020 while the labour force moderated to 1.8 per cent y-o-y.
“This was the lowest recorded since December 2016,” MIDF Research said.
According to the Department of Statistics Malaysia (DOSM), unemployed persons increased by 17.1 per cent to 610,500 as compared to 521,300 in the same month in 2019.
“The unemployment rate in March 2020 increased to 3.9 per cent. The high unemployment rate in March 2020 reflects the negative impact of the Movement Control Order (MCO) on the labour market.”
MIDF Research noted that the unemployment rate was also the highest since June 2010. The research arm further noted that with the MCO implemented in March 2020, many businesses were out of operation, resulting in higher unemployment.
“In spite of the increase, the economy is still considered as under full employment condition. However, moving forward, we foresee unemployment rate to breach the four per cent full employment condition in upcoming months. Nevertheless, we opine the job market will slowly recover as the Government starts to open up the economy and the fear surrounding the Coronavirus Disease 2019 (Covid-19) begins to subside.”
As such, MIDF Research reiterated that Malaysia’s unemployment rate will maintain under state of full employment in 2020 but with an upward tick to 3.8 per cent.
“Moderation could be observed in the employment growth this year due to the slowdown in both domestic and global economies.”
MIDF Research opined the current external headwinds will affect the labour force even more in the second quarter of 2020 (2Q20) with the imposed movement control order that has thundered many companies’ particularly small businesses.
“However, we are confident jobless rate to remain below four per cent and operating at full-employment condition for the whole year of 2020 as some of the stimulus measures announced by the Government may moderate the pressure particularly on wage subsidy.
“In addition, Malaysia’s steady performance in containing the virus will provide some positive sentiment.”