Unemployment rate to ease to 4.3% this year

by SHAHEERA AZNAM SHAH / pic by MUHD AMIN NAHARUL

THE domestic labour market is projected to chart an improvement this year, with the unemployment rate expected to be reduced between 4.2% and 4.3% compared to the historic high of 4.5% in 2020 due to the Covid-19 pandemic.

Human Resources Minister Datuk Seri M Saravanan said despite the improved outlook, several issues still curb the growth of Malaysia’s labour market including a mismatch between qualifications and job opportunities, as well as slowed career growth and salaries.

“The ministry will continue to monitor the local labour market and give attention to the appropriate intervention programmes to stimulate recovery and drive the labour market’s efficiency,” he said in a statement yesterday.

Citing the “Quarterly Labour Market Perspectives — Modest Labour Market Recovery” report published by the EIS-UPMCS Centre for Future Labour Market Studies (EU-ERA), Saravanan said Malaysia’s labour market recorded a moderate improvement in the fourth quarter of 2020. He said the improvement was attributed to the ease of movement restrictions as the government implemented the Conditional Movement Control Order in several states.

“The loss of employment rate in the private sector also reduced for the quarter while work placement for categories including the professionals, managers, executives and technicians roles increased.

“According to the report, in 2020, the labour market recovery recorded a ‘trapezoid’ pattern, which reflected the imbalance trend between job seekers and job opportunities,” he said.

Saravanan added that the excess of job seekers requires serious attention and will result in a wider gap if it is not being addressed due to the growth rate of new employees coming into the market.

“The job creation for salaried employees only grew at a rate of 1.1% compared to 7.5% in the same quarter of 2019.

“Salaried workers comprised 77% of the total workforce in Malaysia in 2019 and slower job creation under this category was the major contributor to the unemployment rate in the country,” he said.

The EU-ERA’s report stated that the labour market has been more severely impacted by the pandemic compared to the financial crisis in 1997 despite the less economic aftermath recorded during the former.

“Although the impact on economic growth during the pandemic is less severe than the Asian financial crisis, the pandemic has a more profound impact on the labour market.

“Malaysia was able to maintain an unemployment rate of 3.2% that was induced by the Asian financial crisis.

“However, the pandemic has resulted in thousands of people losing their jobs and income, increasing the unemployment rate to 4.5% in 2020,” the report stated.

The report also cited several casualties that have emerged from the pandemic including the possibility of structural transformation lead to the increase in labour market imbalance.

“Some of the jobs that disappeared will not come back. The current structural transformation of the labour market is affected by digitalisation and automation of jobs.

“Some skills may no longer be required for new jobs. The discrepancies between the employers’ demand and the skills of labour explain the large number of employed persons with mismatched skills and unemployed people who did not get appropriate jobs.

“The current structural transformation increases the risk of the labour market’s demand-supply imbalance,” it said.