Malaysia’s labour mart to remain under pressure, says AmBank Research

MALAYSIA’S labour market remains under pressure as uncertainty is high due to growing concerns of a second wave of the Covid-19 pandemic, AmBank Research warned in a July 15 note.

“Should it (outbreak) happen, there is the risk of another round of lockdowns and MCOs and (it) remains unclear if it will be similar to the first attack or will be more targeted,” the research house said.

Three factors will weigh on the job market, AmBank Research noted: risk of political uncertainties, once the moratorium on loans expires and the end of wage subsidies.

“However, the upside to the unemployment rate is likely to be contained to some degree from the stimulus measures and should the global economy also start to bottom out,” the research house said.

AmBank Research added that the unemployment rate was likely to hover between 6% and 8% this year.

The Department of Statistics Malaysia yesterday said the unemployment rate continued to rise in the month of May to 5.3%, the highest seen in about 30 years, which were 5.6% and 5.7% in 1985 and 1989, respectively. The highest reported was in 1986 at 7.4%.

But despite the increase in numbers of unemployed people to 826,100 in May or up 47,300 from April, it was still lower compared to the 168,300 rise between March and April when the unemployed number rose to 778,800 in April.

Also, the number of those temporarily not working fell from 4.87 million in April to 2.27 million in May.

These could be attributed to (1) stimulus packages of RM295 bil through fiscal, monetary and financial to support the economy; and (2) opening up of the economy from the movement control order (MCO) to conditional MCO by allowing businesses to commence operation while adhering to the standard operating procedure guidelines. – July 15, 2020

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