Economically, the country has a 30% unemployment rate as our labour participation is below 70%
by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL
MALAYSIA’S unemployment rate may be much higher and made worse due to the Covid-19 pandemic, an economist warns.
Dr Nungsari Ahmad Radhi said statistically, Malaysia has a 5% unemployment rate, but economically, the country has a 30% unemployment rate as our labour participation is below 70%.
“The real question is, do we have the ability to create new activity to reduce unemployment?
“What is important now, Malaysia needs to create a social safety net to protect those who are not even in the labour market,” Nungsari said in a webinar entitled “The Future of Work in the New Normal: The Bigger Picture” yesterday.
Malaysia, he said, needs readjustment and installed capacity of investment globally to create a supply side that will lead to creation of jobs.
“This rebalancing between the gap of installed capacity and following up the consumption rising due to the pandemic would actually shape emergence of a new normal,” he said.
Meanwhile, Khazanah Research Institute visiting senior fellow Dr Jomo Kwame Sundaram said the global financial crisis brought by Covid-19 may bring a global economic system in favour of “deglobalisation” or “slowbalisation”.
He noted that it may be too premature to predict this will necessarily be the consequences, and stressed that slowbalisation has started to emerge in line with the global financial crisis.
“The Group of 20 countries, while preaching trade liberalisation to the rest of the world, introduce various actions which amount to economic protection.
“However, even after the advent of the financial crisis, not surprisingly, the international trade button has not been changing much, and investment has grown less even before Covid-19,” he said.
With Covid-19, Jomo said loss of jobs in the developing country has not been struck off by the creation of new jobs. In fact, he said, there is reduction in new jobs because of automation.
Jomo added that even with cheaper labour, companies will opt for automation if it can save costs more.
“We see some countries have provided opportunities, for example Korea and China which have become part of this so-called international supply chains.
“In some situations, their own entrepreneurs have emerged, creating companies which have not really been producing new goods, rather they have been able to take advantage of financial opportunities to make more and more money,” he added.
“And this, of course, has distorted the character of industrial growth in very important ways. What has happened, China has successfully taken advantage of new situations to develop its own enterprises.
“This also represents a challenge to the US and leads into a new culture called identity politics,” he explained.