(Source: Department of Statistics, CEIC, Kenanga Research)
KUCHING: The labour market is expected to recover towards the end of the year in tandem with the expected resumption of economic activities with the progress of the Covid-19 vaccination rate and the relaxation of standard operating procedures (SOPs), analysts observed.
In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) commented: “While the extended movement restrictions and the prolonged interstate travel banned are expected to weigh on the services sector, particularly the retail, tourism and transportation sub-sector, we expect the labour market to recover towards the end of the year.
“This is in tandem with the expected resumption of most economic activities with the progress of the Covid-19 vaccination rate and the relaxation of SOPs for fully vaccinated people.”
In addition, it pointed out that the ongoing various policy support, coupled with sustained export-oriented manufacturing sector activities and an unleashing of expected pent-up demand, would contribute to a steady pick up in hiring activities by year-end.
Meanwhile, the research team at Hong Leong Investment Bank Bhd (HLIB Research) noted that there has been a decline in loss of employment (LOE) in August, which is consistent with the transition of more states into the later phases of the National Recovery Plan (NRP).
“As of end-August, only four states and two federal territories (Selangor, Johor, Kedah, Melaka, KL and Putrajaya) remained in Phase 1.
“Klang Valley is set to progress to Phase 2 yesterday (September 10). This should further improve the labour market situation, alongside permission granted for businesses to operate based on their workers’ vaccination rate,” it said.
“The transition of eight states (Perlis, Kelantan, Terengganu, Pahang, Perak, Pulau Pinang, Sabah and Sarawak) to Phase 2 of the NRP has helped cushion the impact of lockdown measures on the labour market in July.
“These states constitute 47.3 per cent of Malaysia’s total labour force, while the remaining states still in Phase 1 make up 52.7 per cent.
“The number of unemployed persons slowed to 1.2 per cent m-o-m (June: 5.6 per cent m-o-m). The unemployment rate stood at 4.8 per cent (Jun: 4.8 per cent),” it further explained.
HLIB Research also noted that in terms of unemployment duration, the share of unemployed for less than three months nudged up (53.9 per cent; Jun: 52.3 per cent). However, those without a job for longer periods of three to less than six months (24.1 per cent; June: 24.5 per cent), six to less than 12 months (13.2 per cent; June: 13.5 per cent) and more than one year (8.8 per cent; June: 9.8 per cent) has decreased.
“Employment growth remained positive (1.5 per cent y-o-y; June: 2.1 per cent y-o-y) but recorded a slight decrease on a m-o-m basis (-0.02 per cent m-o-m; June: -0.5 per cent m-o-m) following a decline across all sectors, excluding services.
“Higher employment in this sector was mainly attributed to food & beverages services, transport & storage and information & communication services,” it said.
In terms of status of employment, it noted that there was a slight addition in own account workers (16.4 per cent; June: 16.3 per cent), partly due to the green light given to small businesses such as hawkers or food & beverage stalls to operate during the NRP. Meanwhile, the number of employed persons who were temporarily not working fell to 776,300 persons (June: 801,100 persons).
All in, despite its optimism on the labour market, Kenanga Research cautioned that there are still downside risks associated with the unabated surged of Covid-19 infections brought by the new and highly contagious Delta variant, impeding the pace of economic recovery.