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Malaysia: Challenges for the labour market to remain
PETALING JAYA: The unemployment rate, which stood at 4.8% in December last year, is expected to remain elevated in the first half of the year.
BIMB Securities said it foresees challenges for the labour market to continue recovering in the coming months, as businesses may hold back hiring on concerns about weaker domestic demand and sales outlook.
“The unemployment rate will likely remain high until the middle of this year before more economic activities can recover on the availability of Covid-19 vaccines.
“The labour market will continue to face uncertainties and the near-term labour market outlook is expected to remain dim as the third wave of the pandemic prolongs.
“Pressure in the labour market from both the increased number of people who were temporarily not working as well as higher unemployment will continue, and therefore, we are extra cautious about the progress in the labour market recovery, ” it said.
The research house also noted that there were no signs yet of the virus outbreak subsiding.
The resurgent cases, which have been increasing at a record pace and putting total infections at over 240,000, and the MCO 2.0, which will see a month of inactivity, could have a significant hit to the economy, it noted.
However, BIMB said with businesses allowed to operate according to the standard operating procedures (SOPs), it expects labour demand to continue growing going forward, as the weak demand condition would eventually improve with sentiment improving in view of the availability of vaccines.
“We also expect the labour market recovery to continue benefiting from government initiatives to support employment growth, as well as the expected rebound in economic growth.
“The initiatives by the government are set to provide support to the hardest-hit groups and sectors, and also to sectors likely to be able to generate numerous jobs quickly, ” it added.
The labour force survey conducted by the government showed that the unemployment rate for 2020 had risen to a record level of 4.5% due to the ongoing Covid-19 pandemic.
The unemployment rate rose to 4.5% in 2020, the highest rate recorded since 1993 (4.1%).
The Statistics Department said the health crisis had a huge impact on the labour force, which led to the unemployment rate moving above 4% compared to an average of 3% pre-Covid-19 pandemic.
Compared to the previous quarter, the fourth-quarter 2020 showed that the number of unemployed increased by 0.1 percentage point from 4.7%.
In December 2020, unemployment rose to 772,900 persons at a rate of 4.8%.
Source: https://www.thestar.com.my/business/business-news/2021/02/10/challenges-for-the-labour-market-to-remain