KUALA LUMPUR (July 15): AmBank Group Research said Malaysia’s labour market remains under pressure and uncertainty remains high, with growing concern of the “Second Wave” of the virus attack, while the country’s unemployment rate is likely to hover between 6% and 8% in 2020.
In a note today, AmBank chief economist and head of research Dr Anthony Dass said should it happen, there is the risk of another round of lockdowns and mandatory movement controls (MCOs) and remains unclear if it will be similar to the first attack or will be more targeted.
Dass, who is also an adjunct professor in economics at the University of New England, Sydney, Australia and member of the national Secretariat of Economic Action Council said risk of political uncertainties, post moratorium and end of wage subsidy will weigh on the job market.
He said as expected, the unemployment rate continued to rise in the month of May to 5.3%, the highest seen in about 30 years ago which was 5.6% and 5.7% in 1985 and 1989, respectively.
Dass said the highest reported was in 1986 at 7.4%.
He said it was impacted by sectors like services (mainly tourism, accommodation, event planning, arts and entertainment, sports and recreational activities) and construction as a result of the health authority increased detection of Covid-19 clusters among foreign workers.
“Despite the increase in the numbers of unemployed to 826,100 in May or up 47,300 from April, it is still lower compared to the 168,300 rise between March and April when the unemployed number rose to 778,800 in April.
“Also, the number of temporarily not working fell from 4.87 million in April to 2.27 million in May,” he said.
Dass said these could be attributed to (1) stimulus packages of RM295 billion through fiscal, monetary and financial to support the economy; and (2) opening up of the economy from the MCO to conditional movement control order by allowing businesses to commence operation while adhering to the SOP guidelines.
“The upside to the unemployment rate is likely to be contained to some degree from the stimulus measures and should the global economy also start to bottom out," he said.