Employment remains a question under Budget 2022

MEF is of the view that the job-creation initiatives under Budget 2022 would be able to reduce the unemployment rate to 4% for example


BUDGET 2022 has provided several measures to address the nation’s high unemployment rate, but the question remains whether it will be able to contribute positively in terms of value and productivity to the economy.

Malaysian Employers Federation (MEF) hopes that the implementation of the initiatives for the budget would be done in a clear and transparent manner.

MEF president Datuk Dr Syed Hussain Syed Husman said Budget 2022 initiatives would help alleviate the rising unemployment situation, which increased to 711,000 in 2020 from 508,200 in 2019 while youth unemployment rose to 12% or 314,000 persons in 2020 from 295,800 in 2019 (10.5%).

“Covid-19 significantly impacted jobs and sources of income, and unemployment rose to 5.3% in May 2020. With more businesses allowed to operate, the unemployment rate dropped to 4.6% in August 2021. However, about 750,000 unemployed people need to be given assistance,” he told The Malaysian Reserve (TMR).

“MEF is of the view that the job-creation initiatives under Budget 2022 would be able to reduce the unemployment rate to 4% for example, the rate at which Malaysia will be considered as having full employment under the International Labour Organisation’s definition of full employment,” he added.

MEF also welcomes the decision to extend the reduced EPF minimum contribution rate of 9% until June 2022 and to allow small and medium enterprises to postpone income tax instalments for six months until June 30, 2022, as this would greatly help ease cashflow issues.

Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said the introduction of the Jamin Kerja Keluarga Malaysia (JaminKerja) initiative aims to create 600,000 job opportunities with an allocation of RM4.8 billion.

Institute for Democracy and Economic Affairs (Ideas) CEO Tricia Yeoh described it as a good short-term measure, but questioned whether the jobs are productive and sustainable in the long term.

“I hope the jobs created are valuable to remain employable well into the future rather for the government just to satisfy the number. Furthermore, there is no update on job creation under Budget 2021 yet.

“The government’s proposed two-year extension for 10,000 contract doctors in Budget 2022 is also insufficient to justify the group’s need,” she told TMR.

The government via the Social Security Organisation will continue its hiring incentive via the JaminKerja initiative with a target of 300,000 people and an allocation of RM2 billion.

Under this initiative, for employers who hire Malaysians who have not been actively employed, the government will provide an incentive of 20% of the monthly salary for the first six months and 30% for the next six months subject to jobs with a salary of RM1,500 and above.

Putrajaya has also agreed to extend the contracts of more than 10,000 medical, dental and pharmaceutical officers for a maximum of four years after their two-year compulsory service period to ensure continuity of their service and also as preparation for their specialist training.

While Ideas welcomes the fact that the 600,000 will be secured jobs, it stressed that this should only be a short-term measure. Over the coming year, the government should ensure those employed contribute productivity to the national economy, rather than serve as rent seekers.

“Job creation requires ensuring that an overall stimulating environment that encourages competition and reduces regulatory burden on businesses is achieved. This is the most natural way to create jobs, while simultaneously maintaining data-based policy decision-making in the event of future pandemics to avoid blanket economic lockdowns,” added Yeoh.