PETALING JAYA: While Malaysia’s February unemployment figure of 3.3% is only marginally higher than the 3.2% seen in January, experts believe the number will increase going forward.
Sunway University Business School Professor of Economic Dr Yeah Kim Leng thinks the February unemployment figures are likely to be the last of the good months.
He expects that businesses will refrain from recruiting and will be looking to optimise their operations by shedding excess staff.
“The worst is likely to come in the coming months from the start of the movement control order (MCO) to the gradual return to normalcy not only on domestic demand but also for our export market in the hardest hit economy,” Yeah told SunBiz.
This time around, he expects that unemployment will affect the unskilled foreign workers in the plantation and construction sectors the most, along with those that are employed by SMEs.
“The wage subsidy programme implemented by the government is expected to help stall the unemployment issue, although it is never meant to staunch the issue,” he explained.
BIMB Securities Research believes the unemployment rate could inch up to 3.8% this year, as a slowdown in both domestic and global economies weaken exports and consumption, in turn affecting employment opportunities particularly in services and manufacturing sectors.
In a note, it said employment plays a significant role in boosting private consumption and investment which subsequently facilitate economic growth.
“However, growth in both consumption and investment is expected to be modest this year and these could affect employment decisions. However, the stimulus package introduced by the government may partially offset the impact,” it said.
While the economic stimulus package announced by the government contained measures to support workers and jobs market, the risk ahead is more about income and job losses.
“This includes increases in half pay/unpaid leaves, as the government now officially allows for employers to negotiate with employees on options like salary/wage cuts and unpaid leave during the MCO period, and potentially after the MCO period due to the economic fallout of the Covid-19 pandemic,” said the research house.
Bank Negara Malaysia (BNM) previously said that Malaysia’s unemployment rate is expected to shoot up to 4% this year, from 3.3% in 2019.
For February, unemployment increased to 3.3% as compared to 3.2% in January 2020, according to figures by the Department of Statistics Malaysia.
Chief Statistician Malaysia Datuk Seri Mohd Uzir Mahidin said in February the number of unemployed increased 2.6% to 525,200 persons, compared with the previous month.
“The unemployment rate in February 2020 was still unaffected by the internal shock caused by the Covid-19 pandemic and is expected to have an impact on the unemployment rate beginning in March 2020,” he said.
Meanwhile, the labour force participation rate in February 2020 decreased by 0.2 percentage point to 68.7% compared with the previous month. However, on a year-on-year basis, the labour force participation rate increased 0.2 percentage point from 68.5% previously.
The labour force in February rose 2.1% to 15.87 million persons against February 2019. The number of employed also increased 2.1% to 15.34 million persons.
Meanwhile, according to the Malaysian Institute of Economic Research, Malaysia’s gross domestic product may shrink by about 2.9% year on year in 2020, resulting in an estimated 2.4 million people losing their jobs. Of the 2.4 million expected job losses, 67% will be among unskilled workers.
