Risk of rising unemployment remains high

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan told StarBiz that 2021 has to take into account the 2020 cohort that are coming out of the education system.

PETALING JAYA: The worsening Covid-19 situation that has triggered a second round of movement control order (MCO) in Malaysia has once again cast the spotlight on unemployment.

Businesses are staring at a road full of uncertainties ahead even with the hint of vaccine optimism and as it is, unemployment in 2021 remains jittery.

Many are worried that this MCO, with its possible extensions, would be the straw that breaks the camel’s back.

With the expectations of an economic reset as soon as a massive inoculation can be carried out with the Covid-19 vaccine availability, Malaysia has a herculean task on its shoulders, which is to deal with 764,400 that are currently unemployed and possibly around one million new entrants to the job market.

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan told StarBiz that 2021 has to take into account the 2020 cohort that are coming out of the education system.

“They are supposed to graduate last year but because of the disruption, they are supposed to take their final exams this year.

“And also taking into account the 2021 cohort, we’re talking about a double input into the labour market this year, with a high of about one million people, ” he said, adding that despite the government’s commitment in Budget 2021 to create 500,000 new jobs, the present situation would make it very challenging moving forward.

The latest unemployment figures in November by the Statistics Department showed that the rate was slowly creeping up and it would only remain elevated this year.

Malaysia’s unemployment rate rose to a high of 5.3% in May last year and moderated to 4.6% by September, only to start rising again to 4.7% in October and 4.8% in November.

Acknowledging that there is no choice for the government but to implement the MCO due to the safety of the people, Shamsuddin said unemployment would remain challenging as more companies freeze their hiring.

“And unfortunately this time around, the MCO was announced without any kind of further subsidies given to employers, not like the first time when there was Employment Retention Programme, the Wage Subsidy Programme and even a general moratorium for employers and employees.

“This time around, assistance is really required from the government for the employers to try to retain their employees.

“Our only hope is more employers will be allowed to continue with their operations, so at least they can maintain their services and supply to clients, ” he said.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said businesses would continue to remain cautious in their hiring decision as the outlook is highly uncertain.

“At the same time, competition will continue irrespective of the Covid-19 spread. On one hand, businesses would be mindful of taking new staff. On the other spectrum, they need to keep abreast with the competitive landscape of their industries in which they operate.

“This would mean they need to hire labour that would enhance their productive capacity and be able to capture market share, ” he said, adding that the demand for skilled workers would remain healthy.

Afzanizam said the concern was on unskilled workers which would likely be marginalised by technology as well as shocks from the pandemic.

He expects the unemployment rate to remain elevated this year.

Maybank IB Research said amid a “sticky” jobless rate, persistent fall in manufacturing jobs and incomes, the re-imposition of MCO and an emergency declaration to flatten Covid-19 infections, it retained its 4.5% unemployment rate forecast for 2021 on the back of heightened risk of “scarring effect” in the job market.

Meanwhile, the Statistics Department recorded a decrease in persons “temporarily not working” from 183,600 in October to 142,000 in November.

This group of employees are not classified as unemployed because they have jobs to return to, but are currently unable to perform their jobs off workplaces.

If included in the unemployment figures, the rate would have been 5.6%.

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