The labour market conditions improved in Feb. Employment increased by +0.2% MoM (Jan: +0.1% MoM), contributed by services, manufacturing and construction sectors. Meanwhile, the expansion in labour force (+0.2% MoM; Jan: +0.2% MoM) and fall in unemployed persons (-0.6% MoM; Jan: +1.2% MoM) led to a lower unemployment rate of 4.8% (Jan: 4.9%).

DATA HIGHLIGHTS

Despite the extension of MCO 2.0 to 18th Feb 2021 in all states except Sarawak, three additional businesses (night market, hair salon, car wash) were allowed to operate. Subsequently, retail stores and sports activities were also given the green light. For the remainder of the month, only Selangor, Kuala Lumpur, Johor and Penang remained under MCO 2.0. In line with the pickup in economic activity, the number of unemployed persons declined after four consecutive months of increase (-5.0k, -0.6% MoM; Jan: +9.6k, +1.2% MoM). The unemployment rate also fell to 4.8% (Jan: 4.9%).

In terms of unemployment duration, there was an increase in share of actively unemployed for less than 3 months (50.6%; Jan: 48.9%), 6 to less than 12 months (14.1%; Jan: 13.8%) and for over 1 year (11.3%; Jan: 10.5%). However, the share without a job for 3 to less than 6 months narrowed (24.0%; Jan: 26.8%).

Employment rose by +33.3k persons or +0.2% MoM (Jan: +21.9k persons, +0.1% MoM). Sectorial wise, the services sector continued on its upward trend, predominantly in ‘wholesale & retail trade’, ‘education’ and ‘human health & social work’ activities, while employment remained weak in tourism-related industries, as expected. Manufacturing and construction sectors also contributed to employment growth while agriculture and mining & quarrying sectors recorded reductions in the number of employed persons. In terms of status of employment, the share of own account workers increased to 15.9% (Jan: 15.7%), while the number of employed persons who were temporarily not working declined to 150.8k persons (Jan: 158.9k persons) as mobility restrictions eased.

Labour force participation rate stood at 68.5% (Jan: 68.5%) following an increase in size of labour force (+28.4k; Jan: +31.5k).

Separately, SOCSO reported that loss of employment (LOE) continued to fall in Mar (5.8k; Feb: 6.3k) as six states (Melaka, Pahang, Terengganu, Sabah, Putrajaya, Labuan) entered the RMCO phase. On government’s initiatives to support labour market, as of 26th Mar 2021, a total of RM13.95bn has been distributed under the Wage Subsidy Programme (PSU) 1.0 and 2.0, benefitting 3.27m workers (20.4% of labour force).

HLIB’s VIEW

Although there have been improvements in labour market conditions, the pandemic could still have scarring effects on the labour market. The share of actively unemployed persons without a job for more than 1 year has been rising, reaching 11.3% in Feb from 6.4% in Apr 2020, when MCO first began. Nevertheless, there is some cause for optimism as economy reopens and vaccination programme advances. According to a job and recruitment agency, Michael Page’s Talent Trends 2021 report, it found that about a third of Malaysian employers are looking to increase headcount in 2021, especially in technology and fintech, global services/shared services centres, fast moving consumer goods, healthcare and manufacturing. Maintain 2021 GDP at +5.0%.

Source: Hong Leong Investment Bank Research - 9 Apr 2021