Labour market improves in 2Q21

The improvement was underpinned by more operations of economic and social activities 

By NURUL SUHAIDI / Pic BERNAMA

THE labour market improved in the second quarter of 2021 (2Q21) compared to the same quarter last year, but it has yet to recover to pre-pandemic level, according to the Department of Statistics Malaysia (DOSM). 

“Malaysia’s labour market was in a better situation in 2Q21 compared to a year ago indicated by improvement in both labour supply and demand, but has yet to return to pre-pandemic level. 

The improvement was underpinned by more operations of economic and social activities, particularly at the beginning of 2Q, including reopening of secondary education, as well as permission for food stalls and hawkers to operate in conjunction of the fasting month of Ramadhan,” said Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin. 

The labour force participation rate increased by 0.2 percentage points to 68.3% from the same quarter the previous year, as a result of more people joining the workforce. 

Given the revised lower economic growth forecast for 2021, labour market growth is projected to be slower as businesses select a conservative approach to run their operations while waiting for the pandemic to subside. 

Mohd Uzir explained that the number of unemployed remained high as against an average of 500 thousand persons recorded during the pre-Covid period. 

Thus, the number of the labour force in 2Q21 grew 1.9% registering 15.97 million persons (2Q20: 15.68 million persons) while the number of outside labour force rose 1% to record 7.42 million persons (2Q20: 7.35 million). 

Labour productivity per employment went up by 13.6% in 2Q21 compared to a marginal decline of 0.4% in the previous quarter. 

Meanwhile, labour productivity per hour worked dropped 12.8%(1Q21: 0.4%) following a larger increase in hours worked as compared to the growth in value-added.

During this period, total hours worked recorded a double-digit growth of 33.2% to 8.31 billion hours. 

In concluding the labour market performance for 2Q21, Mohd Uzir said, “Malaysia’s labour market situation improved considerably compared to the same quarter in the preceding year when the impact of Covid-19 first hit the country. 

“However, necessary mitigation actions were implemented towards the end of 2Q21 to protect the public health and constituted continuous restrictions of social and economic activities.” 

Due to more stringent procedures in comparison to 1Q21, he said the labour market’s gradual recovery momentum did not pick up during the quarter.

DOSM noted that the small and medium enterprises (SMEs) were the worst hit due to Covid restrictions, while at the same time the industry employs up to 7.25 million people or 48% of the employment in Malaysia. 

It said in terms of cashflow management, the wage subsidy programme and loan moratorium are among the short-term initiatives that could ease the cashflow of the SMEs. 

“In the longer run, a systematic shift towards automations and digitalisations can be explored with initiatives such as SME Digitalisation Matching Grant, SME Technology Transformation Fund, Smart Automation Grant and Small Entrepreneur Digital Empowerment Programme,” the Department noted. 

These initiatives are some of the means to assist SMEs sustain their businesses and ensure that they are equipped with the right tools and skills required to innovate and scale their businesses to greater heights.