Labour market remains resilient despite external environment challenges, says MIDF Research

In the 1H20, there were improvements in vacancy types as the share of lowvalue jobs decreased while high-value jobs improved

by HARIZAH KAMEL / pic by MUHD AMIN NAHARUL

MALAYSIA’S labour market remains resilient amid challenging external environment, according to MIDF Amanah Investment Bank Bhd (MIDF Research).

In its recent report, MIDF Research said the country’s employment growth in January 2020 increased by 2.2% year-on-year (YoY) compared to 2% YoY in December 2019 while the labour force rose by 2.1% YoY.

“Unemployment declined by 0.8% YoY, maintaining its jobless rate below 3.5% for the 27th month at 3.2%. We opine the stable job market will provide a solid foundation for Malaysia’s domestic demand to grow at a solid pace in 2020.

“In addition, we view Malaysia’s labour market to remain stable despite the Covid-19 fear and weak external demand in the first half of 2020 (1H20),” it said.

On job vacancies, MIDF Research noted that average job vacancies per month recorded last year was the lowest in three years at 81,200, in tandem with the moderation in GDP growth.

However, there were improvements in vacancy types as the share of low-value jobs decreased while high-value jobs improved.

MIDF Research said for every hundred jobs available last year, 68 vacancies for elementary occupation against 78 vacancies registered for the same post in 2018.

“Comparatively, share of professionals increased from 2% in 2018 to 3.3% in 2019. Similar trends for senior officials and technicians.

“By sector, share of vacancies in services sector expanded whereas construction lowers due to tepid investment spending and manufacturing impacted by global trade war,” it said. Meanwhile, the jobless rate across developed and emerging economies remain stable and trending downwards.

Despite global risks and political instability, the unemployment rate in the US was maintained at a 50-year low at 3.6% in January 2020, marking the 23rd consecutive month at or below 4%.

Developed economies like the European Union and Japan are indicating positive developments in their job market.

Moving forward, MIDF Research stated that the labour market in developed and emerging economies to remain steady in 2020 despite global risks and volatility in commodity prices.

This is due to accommodative fiscal, monetary policies and steady domestic demand that will provide support for economic and employment growth.

Furthermore, Malaysia’s unemployment rate will maintain under the state of full employment in 2020 but with an upward tick to 3.4%.

“Slight moderation could be observed in the employment growth this year due to the slowdown in both domestic and global economies,” added MIDF Research.

It also suggested the current external headwinds would not prolong until the 2H20, making the unemployment rate to remain at below 3.5% and operating at full-employment condition.

Factors like strong domestic demand, low inflationary pressure, low Overnight Policy Rate and stimulus package would spur Malaysian economic growth this year.