Job market seen to improve in second half

Rising numbers: In this file picture, foreign workers are seen harvesting oil palm fruits at a plantation in Selangor. Higher applications for non-citizen employment following the reopening of borders are expected to ease the labour shortage issue.

KUALA LUMPUR: The labour market is expected to strengthen further in the second half of 2022, underpinned by improving economic conditions.

Hong Leong Investment Bank Research said recovery in the country’s job market is expected to continue as the nation transitions to endemicity.

“Nevertheless, the acute foreign labour shortage remains an issue that is prevalent in all economic sectors, which is only expected to see a meaningful recovery towards the later part of the year.

“We maintain our 2022 gross domestic product forecast at 5.9% year-on-year and expect Bank Negara to raise the overnight policy rate (OPR) by another 25 basis points in September, bringing OPR to 2.5% by end-2022.”

TA Research, meanwhile, said it was revising the country’s 2022 unemployment rate projection to 3.8%, as compared to 4.6% in 2021.

“The labour market in Malaysia is expected to strengthen further in the second half of 2022, underpinned by the continuing momentum of the domestic economic recovery.

“In addition, the increase in employers’ applications for non-citizen employment following the reopening of the country’s international borders is anticipated to ease the labour shortages issues, especially in the construction and agriculture sectors.”

TA Research noted that the first batch of foreign workers from Indonesia that was selected for the plantation industry have already arrived in Malaysia.

“The previous quarantine requirement for foreign workers would also no longer be needed, as long as they are fully vaccinated when they arrive here.

“The sustained labour market will also to be supported by various government initiatives.”

TA Research said non-citizen workers constituted about 13.5% or 2.11 million persons in Malaysia’s working population in the first quarter of this year, which has reduced from an average of 14.9% in 2019.

“Among the risks that could distort the performance of the labour market include the crisis of rising commodity prices prevailing in the market, which had indirectly impacted Malaysia’s economic development.”

The research house also said the increase in the price of goods will result in inflation that will affect the country’s economic recovery.

“With China’s zero-Covid policy, there has been a shortfall and delay in the supply of raw materials, which has impacted the worldwide economy, particularly in the manufacturing sector.

“This sector contributed about 16.6% to Malaysia last year, after wholesale and retail trade, repair of motor vehicles and motorcycles at 18.8%.”

Malaysia’s unemployment rate stood at 3.9% in May 2022, the same rate registered in the previous month.

TA Research said the positive development was underpinned by a stable labour market that is aligned with full operation of all economic activities.

“The encouraging economic activities during the month stimulated more demand for goods and services, thus providing more opportunities for businesses to revive their revenues.

“As a result, the labour market situation remained stable during the month, with employment increasing steadily while unemployment decreased even further.”

The research house said the number of people in the labour force expanded by 0.2% month-on-month, for an annual growth of 2.7% to 16.54 million persons during the month.

“Labour force participation improved by 0.1 percentage point to 69.5% of the population.

“Meanwhile, the number of persons outside the labour force remained on a downward trend for 10 consecutive months, with a reduction of 0.1% to register 7.26 million persons (April 2022: 7.27 million persons).”

On a year-on-year basis, TA Research said this group posted a decline of 1.9%.

“Housework or family responsibilities remained as the main reason for being outside the labour force (42.2%), followed by schooling/training (40%),” it said.