KUALA LUMPUR, Malaysia (July 8): Malaysia’s unemployment rate fell to 4.5 percent in May, down from 4.6 percent in April, and is now at its lowest level since March 2020. Despite the improvement, experts predict labor market difficulties to endure under the current full lockdown.
Julia Goh and Loke Siew Ting of UOB Global Economics and Markets Research said in a note today that while the national unemployment rate achieved a 14-month low in May, it remains higher than pre-pandemic levels.
Given a more stringent lockdown imposed under the enhanced movement control order in a large part of Malaysia’s economic centers of Selangor and Kuala Lumpur, which results in a broader list of business closures between June and July, they expect the overall unemployment rate to shift gears and retrace higher in the coming months.
“Any extension of the full movement control order (FMCO)/ enhanced movement control order (EMCO) beyond mid-July, increased pandemic risks, and delays in meeting vaccination rate targets specified under the National Recovery Plan will stymie the labor market and economic recovery,” they stated.
Nonetheless, they are maintaining their annual unemployment rate prediction for 2021 at 4.5 percent, down from 4.8 percent last year. In comparison, the Bank Negara Malaysia expects the unemployment rate to be between 4% and 5% in 2021.
MIDF Research, although noting that the labor market improved slightly more than projected in May, said it still expects the job market to be negatively impacted by the full lockdown, which prohibits enterprises from operating except in key sectors.
According to a separate report, the unemployment rate will climb in the middle of 2021 as a result of the continued lockdown, before picking up again after limitations are relaxed in the later half of the year, allowing more enterprises to restart operations.
“For the time being, we’re sticking to our forecast of 4.3 percent unemployment this year. “A delayed escape from the lockdown will be the downside risk to our projection if new Covid-19 cases stay high,” it stated.
The latest unemployment rate was announced today by Statistics Department chief statistician Datuk Seri Dr Mohd Uzir Mahidin, who said that there were 728,100 unemployed people in May, down from 742,700 in April, and that the data have been going downwards since February.
According to Uzir, the country had an all-time high monthly unemployment rate of 5.3 percent in May of last year, with 826,100 unemployed people. While the unemployment rate has decreased year over year, it remains much higher than the pre-pandemic average of 500,000 people.
Meanwhile, the number of people employed climbed by 0.1 percent to 15.37 million in April, up from 15.35 million in April. At 65.4 percent, the employment-to-population ratio remained steady.
The services industry, in particular wholesale and retail commerce, food and beverage services, and human health and social work activities, had a month-on-month increase in the number of people employed.
For the seventh month in a row, the number of people engaged in the manufacturing sector has increased.
Construction, agriculture, mining, and quarrying, on the other hand, saw a drop in employment.
“As the country entered the second half of 2021, the FMCO, or total lockdown, was implemented to flatten the Covid-19 infection curve, resulting in a nationwide shutdown of all social and economic sectors except those deemed essential economic and service sectors with a small number of employees on site.”
“With the latest health-containment restrictions in place, economic sectors are expected to encounter hurdles in maintaining their recovery momentum, while tourism-related industries may continue to be hit,” Mohd Uzir added.
He also stated that, depending on the pandemic’s progress, the labor market may face an unbalanced situation in the next months./n
