More Malaysians being hired

PETALING JAYA: More jobless Malaysians have been hired in the past several months, indicating that businesses are expanding again.

But with over 670,000 people still unemployed and over 1.8 million tertiary educated Malaysians suffering from skill-related underemployment, the labour market still has some way to go to recover to pre-pandemic levels.

Hong Leong Investment Bank (HLIB) Research said that the country’s unemployment rate of 4.1% in February 2022 remains well above February 2020’s level of 3.3%.

In comparison, Singapore’s unemployment rate returned to its pre-pandemic level in February 2022 at 2.1%.

HLIB Research also cautioned that Malaysia’s time and skill-related underemployment was also still at elevated levels.

By end-2021, about 1.84 million people were affected by skill-related underemployment, while time-related underemployment involved 293,100 people.

Skill-related underemployment refers to those with tertiary education but were currently working in the semi-skilled and low-skilled categories.

Meanwhile, time-related underemployment refers to a group of people who are employed less than 30 hours during the reference week because of the nature of their work, or due to insufficient work and are able and willing to accept additional hours of work.

AmBank Research said that the domestic labour market continues to be affected by inherent structural issues, with more people moving towards self-employment.

The research house also noted that certain sectors have experienced a decreasing number of employed persons.

“The agriculture and mining and quarrying sectors continued to record a reduction in employment, most likely due to the high dependency on foreign workers in these sectors.

“Employment in agriculture is expected to recover at a slower pace. This is because the reliance on foreign workers is still high while the adoption of automation remains low,” it said in a note yesterday.

AmBank Research pointed out that while foreign workers are allowed to return to Malaysia, the approval rate is still low.

The most affected sectors are plantation, construction and selected manufacturing sub-sectors.

“The Malaysian Employers’ Federation said that of 475,678 applications, only around 2,606 had been approved as of April 1,” stated the research house.

Despite the challenges, Malaysia’s labour market conditions have continuously improved in the past several months.

It is noteworthy that the jobless rate of 4.1% in February 2022 is the lowest recorded since Covid-19 hit the world.

The jobless count decreased for the seventh consecutive month and the number of unemployed persons reduced by 13.6% year-on-year to 671,800 persons.

TA Research noted that the average number of unemployed persons in 2018 and 2019 was about 514,000 and 519,000 persons, respectively.

Moving forward, HLIB Research believes that the country’s transition to endemicity is anticipated to boost job gains, especially in tourism-related industries.

The transition would also assuage the issue of foreign labour shortage that is most prevalent in the agriculture sector.

The government began the transition to the endemic phase of Covid-19 on April 1, after considering the country’s high vaccination rate, low hospital bed usage for Covid-19 patients, and other risk factors.

Almost 16 million booster doses have been administered to adults across the country, and 91.9% of adolescents aged between 12 and 17 have received at least two doses.

AmBank Research is sanguine that positive factors such as the reopening of international borders, Budget 2022 measures and the government’s initiative will further support recovery in the labour market.

Echoing a similar stance, TA Research said various government initiatives such as the Wage Subsidy Programme, Malaysia Short-Term Employment Programme (MySTEP), PenjanaKerjaya, Reskilling and Upskilling Programme, and MyDigitalWorkforce in Tech (MYWiT), would support the labour market recovery.

Financing to empower businesses such as SMEs Soft Loan Funds by Bank Negara and Tekun’s Indian Community Entrepreneur Development Scheme also helped to accelerate the recovery.

“In addition, the reopening of the country’s borders is also seen as a catalyst to revive the shortage of foreign labour in the country.

“This situation allows the economic and business activities to continue operating, leading to more labour demand in the market to accommodate the needs of the business operations.

“Thus, we expect the unemployment rate to keep on improving and average at 4% in 2022, compared with 4.6% last year,” TA Research said.

Bank Negara also expects the unemployment rate to average at 4% this year.

Slightly more optimistic, AmBank Research and Kenanga Research expect an unemployment rate of 3.9% in 2022.

In a note yesterday, Kenanga Research said that the local labour market is likely to gradually recover in 2022, underpinned by a higher vaccination rate, relaxation of pandemic-related restrictions, reopening of borders and various ongoing policy support.

“Nonetheless, the downside risks remain associated with the potential surge of Covid-19 cases brought by the new variant, the ongoing Russia-Ukraine crisis and China’s economic slowdown due to its zero-Covid policy,” it added.

Kenanga Research highlighted that labour market conditions have already relatively improved in the advanced economies.

For example, the United States unemployment rate fell in March to 3.6%, a two-year low reflecting a further tightening of labour market conditions.

In Japan, on the other hand, the unemployment rate edged down in March to 2.7% as people remained in their existing jobs instead of searching for new jobs.

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