Improvement seen in labour market

PETALING JAYA: The labour market is expected to further improve, underpinned by the robust recovery in the domestic economy.

Hong Leong Investment Bank (HLIB) Research, in a report, said the labour market would be fuelled by new job-related initiatives to be implemented under the retabled Budget 2023.

The research house, however, said the pace of recovery would likely slow down going forward in view of the rising global recessionary risks and weakening demand.

Nevertheless, HLIB Research said the global technology downcycle, which has also caused electrical and electronics companies to scale back their production, might slow hiring in the near term.

Kenanga Research, on the other hand, revised its unemployment rate forecast for 2022 down to 3.8% from its previous estimate of 3.9%, given the robust improvement in the labour market condition backed by various policy support as well as the continued recovery in the tourism and transportation sub-sectors.

“Despite global economic slowdown expectations in 2023, we believe that robust domestic demand will support hiring activities next year with global economic recovery expected to start as early as in the second half of 2023,” Kenanga Research said, adding that the unemployment rate would decline to 3.3% in 2023.

“Likewise, we retained the 2022 gross domestic product forecast at 8.6% and to moderate further to 4.3% in 2023, amid an expected global economic slowdown and normalisation in economic activities post-pandemic,” it added.

Last week, the Statistics Department reported that unemployment in the country had dropped to its lowest since the start of the Covid-19 pandemic, to 602,000 individuals in October compared with 605,000 in September.

HLIB Research said the number of unemployed people continued to decline during the month on both a month-on-month (m-o-m) and year-on-year basis, albeit at a slower pace.

Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said in a statement that the unemployment rate remained at 3.6% or 0.3% higher compared with the pre-pandemic rate of 3.3% in February 2020.

The number of workers continued to rise in October with a m-o-m increase of 0.2% to 16.68 million people, compared with 16.66 million in September.

Kenanga Research noted that the jobless rate remained steady among advanced economies. It cited Japan and the United States as examples, where the unemployment rate for October remained unchanged at 2.6% and 3.7%, respectively.

For Japan, Kenanga Research said the unchanged jobless rate reflected a tight labour market that would keep upward pressure on wages, while for the United States, it said the steady unemployment rate indicated that hiring activities remained resilient despite rising interest rates.