Malaysia's jobless rate seen averaging 4.5% for 2021, as July records uptick in number of unemployed

Malaysia's jobless rate seen averaging 4.5% for 2021, as July records uptick in number of unemployed
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KUALA LUMPUR (Sept 9): Economists expect Malaysia's full year unemployment rate to stay at 4.5%, after July's unemployment rate remained unchanged at 4.8%, though with a slight uptick in the number of unemployed.

UOB Global Economic and Markets Research's economists Julia Goh and Loke Siew Ting said in a note today that July's jobless rate was in line with their expectations that the labour market would continue to recover, albeit at a moderate pace, as almost all states or federal territories (except for Johor and Kedah) have been allowed to transition into the second, third or fourth phase of the National Recovery Plan.

With 80% of the country's adult population expected to be fully vaccinated over the next two months (versus 69.6% as of Sept 7), they opined that Malaysia might be able to move into the endemic Covid-19 phase by end October. "More sectors will then be reopened with new Covid-19 norms being practised, reinforcing growth and labour market prospects," they said.

However, they cautioned that uncertainties surrounding new Covid-19 virus variants and business prospects could deter substantial improvement in the nation's hiring, and keep the national jobless rate above the pre-pandemic level of around 3.3% in the near term.

Hence, they maintained their 2021 year-end unemployment rate estimate at 4.5%. In contrast, Bank Negara Malaysia has forecast that Malaysia's year-end unemployment rate would be at 4% to 5%. Malaysia's unemployment rate last year came in at 4.8%.

MIDF Research said the main contributor to the weak job market condition in July was the prolonged lockdown and the imposition of targeted Enhanced Movement Control Order in selected localities in Selangor and Kuala Lumpur — the country's key economic centres.

It said in a note that the relaxation of restrictions will allow more business activities to resume their operations and to increase hiring in the coming months.

However, with the ongoing pandemic remaining as the key downside — and taking into account the recent weakness in the job market following the imposition of the full lockdown in the middle of this year — it adjusted its unemployment rate slightly higher to 4.5% from its previous forecast of 4.3%.

"This adjustment basically reflects the labour market recovery has been weaker than expected, and we foresee the unemployment rate will remain elevated for some time, before it will decline to pre-pandemic levels," it said.

According to the Department of Statistics Malaysia (DOSM), the number of unemployed persons in Malaysia increased to 777,200 in July, up 1.2% from 768,700 in June, though the unemployment rate stayed at 4.8%. Compared with July 2020, the unemployment rate saw an uptick of 0.1 percentage point from 4.7%.

The number of employed persons in July slipped slightly to 15.29 million from 15.3 million in June, weighed down by all but the services sector, while the employment-to-population ratio stayed stagnant at 65%.

Read also:
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Number of unemployed up slightly in July 2021 — DOSM

Tan Choe Choe