The delays in achieving the vaccination rate target set under the NRP will also drag the recovery further
by NUR HANANI AZMAN / Pic by MUHD AMIN NAHARUL
ANY extension of the Full Movement Control Order (FMCO) or Enhanced MCO (EMCO) beyond mid-July would further hinder the labour market and economic recovery in the near term.
United Overseas Bank (M) Bhd (UOB Malaysia) senior economist Julia Goh and economist Loke Siew Ting said the delays in achieving the vaccination rate target set under the National Recovery Plan (NRP) will also drag the recovery further.
In fact, they expect the overall unemployment rate to shift gear and retrace higher in the coming months given a more stringent lockdown imposed and broader list of business closures in June-July.
“However, with the additional fiscal support under the People’s Protection and Economic Recovery Package includes wage subsidies, special grants, loan moratorium and micro-credit financing schemes to safeguard jobs and support business continuity, would provide some relief to the labour market.
“Hence, we maintain our 2021 year-end unemployment rate forecast at 4.5%,” they said in a macro note.
Despite the national jobless rate hitting a 14-month low in May, it remains higher than the pre-pandemic levels.
The unemployment rate in May 2021 was slightly lower at 4.5% compared to April 4.6% despite selected states were placed in the MCO to contain the spread of the Covid-19.
Accordingly, fewer unemployed persons were registered at 728,100 persons (April 2021: 742,700 persons) and it was on a downward trend since February 2021.
Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said with the latest health containment measures, the economic sectors are anticipated to face challenges in maintaining their recovery momentum while tourism-related industries may continue to be impacted.
“With the EMCO being implemented in certain localities in Kuala Lumpur and Selangor, consequently, the labour market may be facing an uneven situation in the ensuing months depending on the stage of the pandemic,” he said in a statement.
Malaysia University of Science and Technology professor Dr Geoffrey Williams said the latest data shows that unemployment is remaining stubbornly high.
Williams, who is also the director of Williams Business Consultancy Sdn Bhd, said the number of employed people who fell into temporary unemployment rose by more than 20% in May compared to April because employers had no work for them or they could not afford to pay them even with the wage subsidies.
“We won’t see any improvement in unemployment or underemployment until the lockdowns end because firms can’t rehire while they are closed.
“Even then, I think it will take a long time before people get back to well paid, meaningful and stable employment,” he told The Malaysian Reserve.
He also believes the headline unemployment figure has to be viewed against the underemployment figure which was 2.4 million according to the last data and had risen by 792,000 since 2019.
“This is people who lost their jobs and work in lower paid, lower skilled sectors to make ends meet, about 2.1 million or who work shorter hours on lower pay about 311,000 according to the last data we have.
“This is the key indicator and when added on to the total unemployment number it shows 19.8% of the workforce is in distress,” he concluded.