The labour market situation improved in Aug as more states moved to less stringent phases of the National Recovery Plan (NRP), alongside the slew of relaxed SOPs for economic activities announced for all phases. Employment rose +0.5% MoM (Jul: -0.02% MoM) following higher employment in services, manufacturing and construction sectors. The labour force grew +0.3% MoM (Jul: +0.04% MoM) while number of unemployed persons fell -3.8% MoM (Jul: +1.2% MoM). Following this, the unemployment rate was lowered to 4.6% (Jul: 4.8%).

DATA HIGHLIGHTS

More states transitioned to less stringent phases of the NRP in Aug. States in Phases 2 to 4 made up a larger share of the labour force (50.8%), while 49.2% were still in Phase 1. Negative growth was recorded for number of unemployed persons (-3.8% MoM; Jul: +1.2% MoM), but remained positive on a YoY basis (+1.0% YoY; Jul: +4.4% YoY). The unemployment rate also fell to 4.6% (Jul: 4.8%).

In terms of unemployment duration, the share of unemployed for less than 3 months (53.8%; Jul: 53.9%) and 6 to less than 12 months (12.8%; Jul: 13.2%) shrank. Meanwhile, those without a job for 3 to less than 6 months (24.5%; Jul: 24.1%) and more than 1 year (9.0%; Jul: 8.8%) has increased.

Employment growth rebounded by +0.5% MoM (Jul: -0.02% MoM). On a YoY basis, growth was steady at +1.5% YoY (Jul: +1.5% YoY). MoM growth was driven by higher employment in services, particularly in food & beverages services, wholesale & retail trade and human health & social work activities. Manufacturing and construction sectors also contributed positively to employment growth. This was largely expected as businesses could operate at greater capacity based on employee’s vaccination rate. Agriculture and mining sectors continued to experience a downward trend in employment. By status of employment, the share of employees decreased (77.4%; Jul: 77.6%), while own account workers rose (16.5%; Jul: 16.4%). Meanwhile, the number of employed persons who were temporarily not working fell further to 671.2k persons (Jul: 776.3k) as more economic activities resumed.

The size of labour force expanded on a MoM (+0.3% MoM; Jul: +0.04% MoM) and YoY basis (+1.4% YoY; Jul: +1.6% YoY). Labour force participation rate inched up to 68.4% (Jul: 68.3%).

Separately, SOCSO reported that loss of employment (LOE) climbed again in Sep to 5.4k (Aug: 4.3k) LOE was mostly concentrated in the manufacturing sector (38.5%), followed by wholesale & retail (14.9%).

The government has approved wage subsidy applications worth RM18.3bn under various wage subsidy programmes (PSU) so far. As of 24th Sep, 2.64m workers benefitted from PSU 1.0 and 0.7m workers from PSU 2.0. Up to 17th Sep, 1.5m workers benefitted under PSU 3.0 and 0.9m under PSU 4.0.

HLIB’s VIEW

As of 8th Oct, three states are in Phase 4, eight states in Phase 3 and five states in Phase 2. No states remain in Phase 1. With the accelerated reopening and resumption of interstate travel once 90% of adult population is fully vaccinated (89.1% is vaccinated as of 7th Oct), we should expect to see a further improvement in the labour market situation driven by the revival of the tourism sector. We maintain our 2021 GDP forecast at +4.1%.

Source: Hong Leong Investment Bank Research - 11 Oct 2021