Labour market conditions remained weak in Dec despite the lifting of CMCO 2.0 in most states. Unemployed persons continued to rise, albeit at a slower pace (+1.1% MoM; Nov: +2.2% MoM). Employment marginally rebounded (+0.1% MoM; Nov: -0.1% MoM) supported by some services and manufacturing sectors, while labour force increased by +0.2% MoM (Nov: 0.0% MoM). Consequently, unemployment rate stood at 4.8% (Nov: 4.8%).

DATA HIGHLIGHTS

The momentum of labour market recovery remained slow in Dec despite the lifting of CMCO 2.0 in all states except W.P. Kuala Lumpur, Selangor and Sabah and reopening of interstate borders. While the unemployment rate steadied at 4.8% (Nov: 4.8%), the number of unemployed persons continued to increase, albeit at a slower pace (+8.5k, +1.1% MoM; Nov: +16.2k, +2.2% MoM).

Employment rose +19.3k (Nov: -11.0k) to 15.22m persons, representing a marginal rebound of +0.1% MoM (Nov: -0.1% MoM). The monthly increase in employment was supported by the services sector, particularly in ‘wholesale & retail trade’, ‘human health & social work’, ‘communication & information’ and ‘education’ activities and manufacturing sector. However, despite the reopening of interstate borders on 7th December, tourism-related industries like ‘accommodation and food & beverages’, ‘transports & storage’ and ‘arts, entertainment & recreational activities’ continued to feel the pinch from the on-going pandemic. Other sectors including agriculture, mining and construction sectors posted a decline. In terms of status of employment, the share of employees rose (77.6%; Nov: 77.5%) but fell for own account workers, which consisted mostly of daily wage earners working at night market and stalls (15.8%; Nov: 15.9%).

In terms of duration, the share of actively unemployed for less than 3 months fell slightly (48.7%; Nov: 48.8%), while those without jobs for 3 to less than 6 months (26.7%; Nov: 26.6%) and 6 to less than 12 months (14.3%; Nov: 14.2%) rose. The share of unemployed for over 1 year remained at 10.4% (Nov: 10.4%).

Labour force participation rate steadied at 68.4% (Nov: 68.4%). As people became more confident on possible job prospects, the size of labour force increased by +27.8k (Nov: +5.2k) amid slight decrease in persons outside the labour force (-2.6k; Nov: +27.1k).

Separately, SOCSO reported an increase in loss of employment (LOE) in Jan to 8.3k (Dec: 6.8k) following the imposition of MCO 2.0 across all states except Sarawak. Meanwhile, there were 129.7k active job openings as at 29th Jan 2021, up from 115.0k in Dec 2020.

On government’s initiatives to support labour market, as of 22nd Jan 2021, a total of RM13.4bn has been distributed under the Wage Subsidy Programme (PSU) 1.0 and 2.0, benefitting 3.15m workers (19.7% of labour force).

HLIB’s VIEW

With the reimposition of stricter SOPs in 4Q20, the unemployment rate inched higher to 4.8% (3Q20: 4.7%) but remained below the peak of 5.1% in 2Q20. In 1Q21, with the re-imposition of MCO 2.0 in all states except Sarawak is expected to pose downward pressure on private consumption activity and labour market, especially in the tourism industry (e.g. F&B, accommodation, travel sectors). Maintain 2020 GDP at -5.5% and 2021 GDP at +5.0%.

Source: Hong Leong Investment Bank Research - 9 Feb 2021