Malaysia Recorded the Highest Unemployment Rate

The pandemic hit the labour market significantly, increased the unemployment rate in Malaysia to 4.5% in 2020, the highest rate recorded since 1993 (4.1%). In December 2020, the unemployment rate reached 4.8%, compared with an average of 3% pre-Covid.

Source: Department of Statistics Malaysia

In the September 2020 labour market data, the Department of Statistics Malaysia (DOSM) presented new labour market indicators in the form of time-related and skill-related underemployment. The statistics, measured on a quarterly basis, defines time-related underemployment as employed persons who work less than 30 hours a week due to the nature of their work or due to insufficient work, and are able and willing to accept additional hours of work.

In the fourth quarter of 2020, there were 533,700 persons who worked less than 30 hours per week compared to the third quarter at 403,800 persons. Out of this total, 369,100 (69%) persons in the fourth quarter were categorised as time-related underemployment compared to 300,800 (74%) persons in the third quarter.

In the meantime, skill-related underemployment - which comprises of those with tertiary education but working in semi-skilled and low-skilled occupations - accounted for 1.89 million persons or 37.4% of the total of employed persons with tertiary education which is an increase from the third quarter of 1.76 million persons or 36.8%.

Lee Heng Guie, executive director of the Associated Chinese Chambers of Commerce and Industry of Malaysia’s Socio-Economic Research Centre (SERC), opines that the underemployment issue warrants attention by policymakers. “It undermines a worker’s potential and productivity and hence, affects the country’s national output. For example, people with high skills but working in low-paid or low-skilled jobs,” he points out.

Lee believes that what could have contributed to the time-related and skill-related underemployment are also structural economic factors such as the lack of skill, the rise of the gig economy or the lack of affordable childcare that undercut the creation of stable jobs.

And now with MCO, both unemployment and underemployment rates are further being impacted. Business outlook is uncertain and managers would be more cautious in hiring new employees. Given a “sticky” jobless rate, persistent fall in manufacturing jobs and incomes, re-imposition of MCO and an emergency declaration to flatten Covid-19 infections, Maybank IB Research retained its 4.5% unemployment rate forecast for 2021 on the back of heightened risk of “scarring effect” in job market.

Meanwhile, Emir Research has found in its Q4 2020 survey that potential job loss remained the biggest concern for Malaysians, with 8 out of 10 expressing this fear. Respondents in the wage category between RM3000-RM5000 appeared to be most worried. The age group in their 30s-40s was most concerned on the living cost dimension. In a separate survey by two UN agencies, it was noted that socio-economic conditions of 50% of low- income families in public flats in KL had deteriorated further in Q4 of 2020. Joblessness among household heads doubled to 15% in December 2020.

We need more stimulus and relief package targeted at self- employed, women who are household heads and those with disabilities. Re- tooling and reskilling the labour force is a key priority.  Digital marketers, coders, writers, finance professionals, and software developers are still in demand. And these jobs could be done remotely. A little more effort and initiative is required by the employable ones and the Government.  

 

Reference:

1.     Unemployment at 4.5%, 9 Feb 2021, Star Biz

2.     High skill-related underemployment reveals structural issues in labour market, 3 Dec 2020, The Edge

3.     Employment trends shaping the labour market in Malaysia, 28 July 2020, https://www.airswift.com/

UN survey: KL’s urban poor, already in dire state, now worse off despite getting Covid-19 aid, 8 Feb 2021, Malaysia Chronicle