PETALING JAYA: Malaysia’s labour market is showing signs of modest recovery in tandem with the improving economic conditions in the country.
According to MIDF Research, the steady unemployment rate of 3.5% in January was indicative of the country’s modest economic recovery. The brokerage said Malaysia’s job market would benefit as the country’s external trade activities continue to improve.
“Malaysia’s unemployment rate reflects moderate recovery in the economy. The rate is considered a full employment condition,” MIDF said.
Malaysia’s unemployment rate held steady at 3.5% in January, figures from the Statistics Department showed last Friday. The jobless rate was unchanged from the preceding month.
In the corresponding month last year, the unemployment rate was 3.4%. The number of unemployed people increased to 514,100 in January from 512,200 in the preceding month. A year ago, the jobless figure totalled 501,500.
“The stabilised unemployment rate is seen as a sign of modest economic recovery in Malaysia,” MIDF said.
It pointed to the steady growth of the industrial production index (IPI), in particular the manufacturing and mining sectors, since the middle of last year. The IPI expanded 3.5% in January.
“Thanks to improving global demand and increase in commodities prices, Malaysian external trade perform better since middle of 2016. Exports and imports grew by 13.6% and 16.1% (respectively) in January,” MIDF said.
“Indirectly, job market will benefit from the improvement in external trade activities,” it added.
MIDF argued that the unemployment rate in Malaysia remained relatively low, compared with many developed countries, especially in Europe, which were still registering double-digit unemployment rates.
“However, unemployment rate in US economy is seen recovering and went down to 4.7% in February.
“The development in US economy may have positive spill over effect to the global economy as well as Malaysian economy,” it explained.
MIDF said the Malaysian economy was expected to grow at gradual pace. Among others, improvement in global economic activity and domestic spending with further public expenditure will add towards steady economic growth this year.
“Manufacturing sector is expected to benefit from the improving global demand whereas mining sector to benefit from the gradual rise in global commodities prices. Therefore, we remain on our course predicting Malaysia to grow at 4.3% in 2017,” it added.
Between 2015 and 2016, unemployment rate in Malaysia was on an increasing trend, led by layoffs in the oil and gas, banking and manufacturing sectors.
These industries were most affected by the slowdown in the economy and downturn in global crude oil prices during the period.
Data showed the country’s jobles rate rose from 3.1% in 2015 to 3.4% in 2016, and labour participation rate fell to 67.7% from 67.9%
Contrary to MIDF’s positive outlook, the Malaysian Employers Federation (MEF) last month projected more people would lose their jobs this year due to the current economic challenges as we;; as the introduction of “disruptive technology” in some industries.
According to the MEF, about 44,000 workers lost their jobs in 2015, and about 40,000 were retrenched during the nine months to September 2016.
In 2015, about 18,000 of those who lost their jobs were from the banking sector due to the introduction of “disruptive technology”, where banks were increasingly adopting online transactions, for example.
Other industries that could be affected included insurance, manufacturing and construction.