WITH more businesses reopening and resuming operations post movement control order, Malaysia is seeing a gradual decline in unemployment rate.
According to MIDF Research, unemployment rate in July fell to 4.7% from 4.9% in June.
However, the unemployment rate is still on a high note as firms are yet to resume operations at full capacity, challenged by the need to comply and adjust to the new norms, MIDF research said in a report today.
In particular, tourism-related sectors such as aviation and hotel could not operate at full capacity due to closure of international borders.
During the month, employment fell at softer rate of -0.7% year-on-year (y-o-y) compared to -1%
y-o-y in June, while unemployment growth slowed to 42.0% y-o-y against 48.3% y-o-y in June.
MIDF believes a recovery path in the labour market will be more evident in upcoming months as businesses adapt to the new normal, adhering to the Standard Operating Procedure (SOP) issued by the government as part of initiatives to contain the spread of Covid-19 cases.
Meanwhile, job vacancies per month increased to 31,800 based on the latest available data in June 2020. This indicates that there is a growing demand for labour as businesses are allowed to re-open.
The number of job vacancies in June is still below the pre-pandemic levels as a result of the prolonged impact of MCO, which saw economic activities abruptly halted from March 18, causing many small businesses to close down.
By sector, vacancies went up in all key sectors with services sector recording the highest vacancies at 13,400, followed by manufacturing at 12,000.
Share of elementary occupations to the total vacancies edged down to 39.8% from 46% in May 2020, as more non-elementary jobs were made available in June.
The remaining 60.2% were for medium and high-skilled jobs, particularly for professionals, technicians and operators.
MIDF maintains its forecast for the unemployment rate at 4.0% for the year and expects unemployment to remain high over several months.
This, it said, was due some companies possibly resorting to retrenchment to manage their operating costs. Companies remain concerned over less encouraging revenue as overall economic activities would take time to fully recover.
On a more positive note, MIDF sees a more stable employment in the second half of the year as the economy has gradually begun to pick up, supported by government stimulus packages such as wage subsidy, employment insurance scheme and reskilling and upskilling initiatives.
In addition, the job market is also set to get a boost from recovery in the international trade and the manufacturing sector, given the involvement of Malaysia in the global supply chain.
MIDF also noted that once the subsidy and wage programmes expire, this may pose as downside risks to the labour market outlook. – Sept 11, 2020
