Gradual Economic Re-opening Boosts Hiring

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Julia Goh, Senior Economist, UOB Malaysia shares about the labour force since the reopening of economic and social activities

Malaysia’s unemployment rate fell to 4.6% in Aug (from 4.8% in Jul) after more economic and social activities were allowed to resume since mid-Aug. The number of unemployed persons dropped for the first time since the re-introduction of Movement Control Order 3.0 in mid-May 2021 and the most since Jun 2020 by -29.4k or -3.8% m/m to 748.8k (Jul: +9.5k or +1.2% m/m to 778.2k). On the other hand, the labour force participation rate improved to 68.4% (Jul: 68.3%).

Total employment rebounded substantially by 81.8k or 0.5% m/m to 15.38m persons (Jul: -2.7k or -0.02% m/m to 15.29m persons), the highest level on record. It was driven by persistent hiring in the services sector as well as an employment recovery in both the manufacturing and construction sectors. Meanwhile, agriculture and mining & quarrying sectors continued to trim headcounts.

The labour market recovery is projected to gain further momentum in the remaining months of 2021 and into 2022 as more businesses have been resuming their operation at a greater capacity since mid-Aug. The strictest lockdown was also lifted across the whole country starting 1st Oct.

According to the Prime Minister, the nation’s adult fully-vaccinated rate has hit 90% (89.1% as of 7th Oct) and interstate travel will be allowed and Malaysia will move into an endemic phase. More government measures are also expected to be unveiled in the coming Budget 2022 to uphold the growth recovery. With all these auguring well for economic and labour market prospects, we tweak our year-end jobless rate estimates to 4.2% for 2021 (from 4.5% previously) and 3.6% for 2022 (from 4.0% previously).

 

**The facts and views expressed are solely that of the author/authors and do not necessarily reflect that of the editorial board