Lockdown pushes unemployment to 4-month high in June

DAP’s Lim presses that the govt must fully reopen the economy to save jobs and slow business closures, or else the SME sector will collapse


A FULL pandemic-induced lockdown led to the acceleration of Malaysia’s unemployment rate to a four-month high of 4.8% in June 2021, from 4.5% in May.

United Overseas Bank (M) Bhd (UOB Malaysia) said the number of unemployed posted the biggest increase in 13 months by 40,600 or 5.6% month-over-month to 768,700 in June, while the labour force participation rate fell to an 11-month low of 68.3%.

“During the lockdown period, only essential services and economic sectors such as food and beverage, utilities, security, health and medical care, transportation, banking, communication, as well as essential construction activities were allowed to ope-rate at 60% workforce capacity amid a 10km-radius travel limit,” UOB Malaysia’s economists Julia Goh and Loke Siew Ting said in a research note yesterday.

Hence, the total employment was reduced significantly in June with 73,300 or 0.5% MoM to 15.3 million persons after hitting an all-time high at 15.37 million in May.

On Monday, Department of Statistics Malaysia (DoSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the labour force was faced with a challenging situation in June following the implementation of the Full Movement Control Order as only essential economic and services sectors were permitted to operate.

Mohd Uzir added that the actively unemployed, which comprised 83.6% cent of the total unemployed persons, recorded an increase of 33,000 persons to 642,900 compared to 609,900 in May.

“Those who were unemployed for less than three months accounted for 52.3% of the actively unemployed, while 9.8% were those in long-term unemployment of more than a year,” he said.

UOB Malaysia economists said it was a broad-based decline with the services sector posting the first deterioration in 12 months.

“The reduction in the services sector was largely from accommodation and F&B services, real estate, as well as wholesale and retail trade activities. The manufacturing sector also lost hiring momentum for the first time in eight months and recorded the largest employment loss since April 2020,” Goh and Loke said.

UOB Malaysia continues to expect a slower recovery in the Malaysian labour market as two main economic hubs — the Klang Valley and Johor — remain under a stricter lockdown since June 1.

“Stubbornly high Covid-19 infection rates due to the more contagious Delta variant and straining healthcare system will likely lead to a more cautious easing of pandemic lockdown over the next three months, despite an accelerating vaccination rate,” they said.

Former Finance Minister Lim Guan Eng has called on the government to act immediately to help businesses and jobs to save lives and livelihoods.

“DAP reiterates our call for welfare assistance to be increased to RM1,000 monthly, including the unemployed to help their families survive. Clearly, there is a need for an immediate allocation of RM6 billion to create 300,000 new jobs, offering hiring incentives to employers of at least RM300 per month and wage incentives to workers of at least RM500 per month for a period of two years to reduce the unemployment rate.”

The Bagan MP cited Entrepreneur Development and Cooperatives Minister Datuk Seri Dr Wan Junaidi Tuanku Jaafar who said small and medium enterprises (SMEs) have suffered a total loss of RM40.7 billion last year as a result of a strict nationwide lockdown.

According to Lim, the nearly one million SMEs comprising 98.5% of all business establishments employ 7.3 million Malaysians in 2020, constituting 48% of the national employment.

Thus, Lim pressed that the government must fully reopen the economy to save jobs and slow business closures, or else the SME sector will collapse.