Malaysia’s average jobless rate to touch 3.5% in 2023, says MIDF Research

MIDF Amanah Investment Bank Bhd (MIDF Research) expects the unemployment rate in the country to decline further to 3.5% as it believes that steady expansion in primary sectors as well as construction and services will prop up more employment opportunities this year.

In a note today, the research unit said the labour market in Malaysia is expected to strengthen further in 2023 underpinned by continuous upbeat momentum in the domestic economy and modest expansion in the external sector. 

“We foresee Malaysia’s unemployment rate to decline further to 3.5%, yet slightly higher than the pre-pandemic level of 3.3%,” said MIDF Research, adding that labour force and employment are predicted to pick-up by 1.6% respectively this year.

Recovery of Malaysia’s labour market continued as the unemployment rate was maintained at 3.6% in December 2022, according to the latest statistics by the Department of Statistics Malaysia (DoSM).

The unemployment rate for youth aged 15 to 24 years fell to a new pandemic low of 11.8%, but remained higher than pre-pandemic (2019: 10.4%). Likewise, the unemployment rate for youth aged 15 to 30 years decreased to 6.9%.

Labour force and employment continued expanding 2.4% year-on-year (YoY) and 3.1% YoY, respectively, supported by robust domestic economic growth and still upbeat external front.

Unemployment dipped further by 12.8% YoY, marking the 16th consecutive months of contraction rate.

In addition, outside labour force reduced by 1.3% YoY, registering the 14th straight months of negative growth rate.

As for 2022, employment growth hit a new record high at 3.5% with solid support from additional job gains of employers by 9.5%, employees by 1.8%, own account workers by 9.7% and unpaid family workers by 6.2%.

Jobless rate averaged lower at 3.8%, still higher than pre-pandemic 2019’s average 3.3%.

“Even though robust economic growth pace recorded last year, we opine labour shortages, tightness in global supply chain and Covid-19 concerns are among downside factors for solid recovery of the job market,” said MIDF Research.

Concluding the overall labour force situation, DoSM chief statistician Datuk Seri Dr Mohd Uzir Mahidin said Malaysia’s economic growth is projected to be modest in 2023, following the impression of global uncertainty in the upcoming months. 

In addition, he said, the increase in the number of tourist arrivals will continue to support the recovery in the tourism subsector along with the improving labour market condition, especially in the services sector.

“As a result, the labour market is expected to remain positive and stable in the coming months, despite the challenges of an unprecedented situation that may occur in the future,” he said. — TMR