Maybank IB Research keeps jobless rate forecast at 3.2-3.3%

PETALING JAYA: Maybank IB Research is maintaining its unemployment rate forecasts at 3.2%-3.3% this year, amid slower economic growth and rising operating costs, due to factors like subsidy cuts/removals, weak ringgit and hike in minimum wage.
In a report released on Monday, its analyst Suhaimi Ilias said the research house believes that these factors will prompt employers to adopt a more cautious stance in hiring.
“Other notable news flow is the report that Petronas is in the midst of considering the retrenchment option in view of the continued slump in crude oil price to manage its operating expenditure, which is compounded by indications of capex (capital expenditure) cuts as Petronas called off the tender for the turnkey delivery of a central processing platform for the Kasawari field development,” he added.
Suhaimi noted that the official statistics on retrenched workers in the first quarter (Q1) to third quarter (Q3) last year were 8,690 persons, up 15.6% year-on-year (y-o-y), compared with 7,516 persons in the same period in 2014.
In comparison, he said 27,314 workers were retrenched in the three quarters between Q4 2008 and Q2 2009 at the height of the global financial crisis.
However separately, the Malaysian Employers’ Federation (MEF) claimed that a total of 20,000 workers were retrenched as of September last year and expected the figure to have reached 25,000 persons by end of 2015.
Suhaimi explained that the discrepancies in the official and MEF figures could be due to the “contract workers” factor, such as workers whose employment were discontinued following the end of their contracts which may well not be treated at “retrenched workers” under the official statistics.
“Nevertheless, notwithstanding the discrepancies on the numbers of retrenched workers, the jobless numbers and the average unemployment rate have risen 3.1% to 21,200 in January to November 2015 versus 2.9% to 8,600 in 2014, indicating some deterioration in the job market condition,” he noted.
Suhaimi said the unemployment rate inched up to 3.2% in November 2015, but overall it has been steady at 3.1%-3.2% since May last year.
He said the unemployment rate has been relatively stable as the labour force expansion was partially absorbed by employment or jobs growth to 13.9 million.
“M-o-m (month-on-month), both labour force and employment were flattish at -0.01% (Oct 2015: +0.1% m-o-m) and -0.01% (Oct 2015: +0.2% m-o-m) respectively.”
“Nonetheless, the latest jobless rate is up from the low of 2.7% recorded in August to November 2014, whereby the number of unemployed rose 20.8% y-o-y and 0.6% m-o-m to 453,300,” he added.