The country’s unemployment rate is expected to linger between 6% to 8% in 2020 as the labour market continues to remain under pressure amidst uncertainties, said AmBank Group Research.
According to AmBank’s chief economist and head of research, Dr Anthony Dass, the labour market is weighed down by concerns of a potential second wave of the Covid-19 pandemic. This would bring on another round of lockdowns and movement control order (MCO), causing further disruptions to the country’s economy. Other risks – such as political uncertainties, post-moratorium concerns, and the end of the wage subsidy programme – also contribute to the flagging job market.
Dr Anthony further noted that the increase of the unemployment rate in May to 5.3% was expected. This is due to the impact from the construction and services industry (tourism, accommodation, event planning, arts and entertainment, as well as sports and recreation) as health authorities escalated their checks for Covid-19 clusters among foreign workers.
That said, Dr Anthony commented that the rise of the unemployment rate from April to May is less drastic compared to the spikes in the months before. “Despite the increase in the numbers of unemployed to 826,100 in May or up 47,300 from April, it is still lower compared to the 168,300 rise between March and April when the unemployed number rose to 778,800 in April,” he said. For comparison, the unemployment rate rose 1.1% from March to April, and 0.3% from April to May.
“Also, the number of temporarily not working fell from 4.87 million in April to 2.27 million in May,” said Dr Anthony. He attributed this to the Prihatin and PENJANA stimulus packages that are worth RM295 billion in total, which offered fiscal, monetary, and financial support to the economy. Additionally, the economy is gradually reopening post-MCO, which sees businesses bringing back its workers to restart operations. This also contributed to the drop in number.
“The upside to the unemployment rate is likely to be contained to some degree from the stimulus measure and should the global economy also start to bottom out,” added Dr Anthony, who is an adjunct professor in economics at the University of New England, Sydney, Australia and member of the National Secretariat of the Economic Action Council.
Malaysia’s highest unemployment rate to have been recorded thus far is 7.4% in 1986.
(Source: The Edge Markets)