DOSM survey results found 52.6% of respondents said their income levels have been severely affected. The MCO had a disproportionate negative effect of own account workers and employers in terms of job losses and significant income drop. In terms of sectors, agriculture and services sectors registered the biggest drop in employment. Expect private consumption growth to be weak for 2020 at 0.5%.

NEWSBREAK

The Department of Statistics Malaysia (DOSM) has released the results of an online survey that was conducted from 23-31 March 2020 to analyse the effects of Covid- 2019 on individuals’ employment and income. 168,182 respondents took part in this on-line survey. While DOSM cautioned that this survey is not representative of the entire Malaysian population, nevertheless, it is a finding that helps shed some light on the impact of Covid-2019.

Financial savings buffer. From DOSM findings, the MCO negatively affects own account workers, employers and employees working in the private sectors more than those working in the Government Linked Companies (GLCs) and multinational companies (MNCs). 71.4% of respondents who are own account workers only have savings buffer of 1 month, followed by workers in private sector (58%), employers (49.2%), GLCs (38.9%) and MNCs (31.2%).

Impact on income from MCO. Over half of respondents (52.6%) say the MCO has affected their income very significantly and 16.4% said they have been affected while only 6.2% of total respondents said they have not been very affected. The top three states most negatively impacted are Sabah (66.7%), Kelantan (65.6%) and Perlis (64%). In terms of status of employment, more than half of own account workers (66%) and employers (65.9%) said they experienced an income drop by 50-100%. Meanwhile, those employed in the private sector (51.3%), GLCs (62.7%) and MNCs (62.5%) stated that they have seen their income decline by 10-49%.

Impact on employment from Covid-19. Own account workers are the most vulnerable group, as 46.6% of respondents said they lost their jobs, followed by employers (23.8%). On the other spectrum, only 0.4% of those working in the GLCs and MNCs responded to job losses. In the private sector, 1.8% stated they were made redundant. Sectorial wise, agriculture recorded the highest job losses (21.9% of respondents said they lost their jobs), followed by the services sectors (15.0%). Within the services sectors, food & beverage sector (35.4%), arts, entertainment and recreation (38%) experienced the highest loss jobs.

HLIB’s VIEW

From the DOSM survey, the impact of Covid-19 is found to disproportionately negatively affect own account workers and employers in terms of job losses and significant income drop. In Malaysia, own account workers and employers account for 19.4% and 3.7% respectively of total employed workers (based on 2018 data: 14.8mn workers). Nevertheless, as the survey states that more than half of respondents (52.6%) said their finances have been severely affected, and only 6.2% somewhat negatively affected, this will undoubtedly put a dampener on private consumption (HLIB 2020 forecast: +0.5%; 2019: +7.6%; GFC: +0.6%). While government’s stimulus measures are expected to provide some buffer to the private consumption in the short-term, the strength and timeline of recovery remains uncertain depending on the evolution of the virus affecting the global and domestic economy.

Source: Hong Leong Investment Bank Research - 10 Apr 2020