Malaysian labour market on right track to recovery, says chief statistician


  • Nation
  • Tuesday, 14 Jul 2020

PETALING JAYA: Malaysia is on the right track to make the labour market vibrant again.

The labour market may find its path to recovery following the implementation of various government initiatives, as well as creative and innovative new business models adopted by industry players, said Malaysia chief statistician Datuk Seri Mohd Uzir Mahidin

"The various programmes introduced would support the unemployed, gig workers and new entrants to the labour market, especially youth and new graduates; as well as upkeep the growth of the gig economy, and provide a social safety net for gig workers," said the Statistics Department's Labour Force Survey (LFS) Report for May 2020.

The report highlighted the labour supply situation in May, the challenges faced and the initiatives undertaken by the authorities to cushion the blow.

According to the report, the number of employed persons recorded a marginal decline of 0.3% from -2% in April to 5.3% (14.89 million) in May following the implementation of conditional movement control order (MCO) in the wake of the Covid-19 pandemic.

The department advised caution in interpreting the monthly statistics, as they were non-seasonally adjusted.

"Employment-to-population ratio, which provides information on the ability of an economy to create employment, dropped further by 0.4 percentage points to 64.4%.

"During the month (May), the affected employed persons were from the services sector mainly related to tourism, accommodation, event management and arts, entertainment, sports and recreational activities, as well as other services," said the report.

There was a noticeable decline in the labour force in the construction sector following the increasing number of foreign workers who tested positive for Covid-19.

The number of self-employed workers also decreased by 161,500 to 2.42 million in May against the previous month.

Those affected were daily wage earners relying on farmer’s market, night markets and stalls, as well as freelancers and smallholders.

Those groups continued to be at high risk of job and income losses in May, as they were not allowed to operate their businesses during the conditional MCO period.

The department also noted that the special Prihatin grant of RM3,000 offered in May was expected to benefit 700,000 small and medium enterprises, including the self-employed.

"Various packages injected by the Government to stimulate the economy, coupled with the announcement of recovery MCO beginning June, is expected to slightly improve the labour

force situation for June 2020; while in the medium term up to the second half of 2020, further progress is deemed possible," it noted

The number of labour force rose marginally by 1,800, as against April, to record 15.71 million persons.

Labour force participation rate (LFPR) in May 2020 stood at 68%, registering a decline of 0.1 percentage point month-on-month, as outflow into outside labour force increased.

Outside labour force recorded an inflow of 47,000 persons as against April 2020, bringing the total total number to 7.39 million.

During the conditional MCO, inter-state movement was still banned, and stringent conditions were imposed on economic activities that were allowed to operate.

Social restrictions imposed, including the stay home order, had considerably reduced demand and consumption, thus affecting the economic cycle.

Incidentally, labour utilisation had yet to resume to optimum levels in May, as businesses had only begun to regain momentum.

To cushion the economic predicament and the consequences it brought to the labour market, the Government issued various packages to stimulate recovery.

The Prihatin Plus package worth RM10bil was announced on April 6 to assist Small and Medium Enterprises (SME) facing financial challenges.

"This initiative was estimated to benefit 4.8 million employees," it said.

Among the initiatives implemented were wage subsidy programmes, special Prihatin grants, abolishment of interest rates under a microcredit scheme, reduction of levy on foreign workers, additional tax deduction and moratorium for statutory documents.

"In May, the number of employed persons who were temporarily not working had reduced by more than half to 2.27 million persons from 4.87 million in April.

"This group of people, who were most likely unable to work from home, was not categorised as unemployed as they still had a job to return to.

"If this group of people were adjusted as unemployed in the absence of work following the MCO, the unemployment rate would have been much higher," it noted.

The actively unemployed for less than three months went up by 30.6%, from 72,200 persons to 308,200 persons compared to the previous month.

In terms of age group, the unemployment rate for adults aged above 25 years rose by 0.1 percentage points, from 3.4% in April to 3.5% in May.

For youth aged 15 to 24 years old, the unemployment rate increased 1.3 percentage points, from 12.9% in April to 14.2% in May.

The RM35bil short-term Economic Recovery Plan, Penjana, covered wage subsidies, reskilling and up-skilling programmes, hiring and training assistance and gig economy social protection, among others.

"According to the Ministry of Finance Malaysia, as of July 6, a total of 2.48 million employees would benefit from the wage subsidy programme through an approved allocation of RM7.15 billion to 310,622 employers," it noted.

The May economic indicators showed improvements compared to April. During the month, the Industrial Production Index surged 18.2% month-on-month as indices for manufacturing, electricity and mining increased.

"Likewise, the sales from the manufacturing sector recorded a double digit growth of 19.1%.

"Exports registered a smaller decline of -3.4% in May as against April (-15.6%).

"Wholesale and retail trade for May increased 26.3%, spearheaded by the motor vehicle subsector.

"These indicators signalled that the economy is gradually improving," said the report.

Despite the continuous negative trend in the labour supply up to May, the situation had improved considerably compared to April.

"As the recovery MCO took effect on June 10 onwards, the business conditions would gradually recover as more sectors are allowed to open with strict standard operating procedures.

"This may allow businesses to regain their momentum, while new business opportunities emerge as demand changes amidst the new norm.

"This in turn is expected to retain employment, create new jobs and spur hiring.

"With this development, in the short term, labour force situation in June is expected to improve slightly while in the medium term up to the second half of 2020, further progress is deemed possible," said the report.

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