Labour market recovery continued in Dec with fourteen states having progressed to Phase 4. Employment (+0.2% MoM; Nov: +0.4% MoM) continued to be driven by services, manufacturing and construction sectors. The unemployment rate fell to 4.2% (Nov: 4.3%), the lowest since Mar 2020, following expansion of labour force (+0.2% MoM; Nov: +0.3% MoM) and lower number of unemployed persons (-1.0% MoM; Nov: -1.5% MoM).

DATA HIGHLIGHTS

Labour market recovery continued in Dec with fourteen states having progressed to Phase 4, except Kelantan and Sarawak. The number of unemployed persons declined further on a MoM (-1.0%; Nov: -1.5%) and YoY basis (-11.0%; Nov: -9.2%) to 687.6k persons (Nov: 694.4k persons). The unemployment rate fell to 4.2% (Nov: 4.3%), the lowest since the onset of the pandemic in Mar 2020.

In terms of unemployment duration, the share of unemployed increased for periods of less than 3 months (55.9%; Nov: 55.7%) and 3 to less than 6 months (23.7%; Nov: 23.6%). The share of unemployed for more than 1 year shrunk (7.6%; Nov: 7.8%), while 6 to less than 12 months remained the same at 12.9%.

Employment grew at a modest pace on a MoM basis (+0.2%; Nov: +0.4%) but edged higher on a YoY basis (+2.8%; Nov: +2.7%). Growth continued to be driven by services, manufacturing and construction sectors which offset the persistent downtrend in agriculture and mining sectors since Aug 2020. In the services sector, higher employment mainly stemmed from wholesale and retail trade, food & beverages services and information & communication activities. By status of employment, the share of own account workers rose (16.9%; Nov: 16.8%) but decreased for employees (76.8%; Nov: 76.9%). Meanwhile, there was an increase in the number of employed persons who were temporarily not working (126.7k persons; Nov: 112.2k persons) owing to severe floods that occurred in mid-Dec.

The labour force continued to expand on a MoM (+0.2%; Nov: +0.3%) and YoY basis (+2.2%; Nov: +2.2%). Following this, the labour force participation rate rose to 69.0% (Nov: 68.9%), the highest rate since Jan 2020.

Separately, SOCSO reported an increase in loss of employment (LOE) in Jan (4.6k; Dec: 3.2k), concentrated mostly in manufacturing, transportation and wholesale & retail industries. 27% of LOE was due to voluntary/mutual separation schemes, while another 24% followed business closures.

As of 17th Jan, the government has approved wage subsidy applications worth RM20.18bn under its four wage subsidy programmes (PSU). In totality, 2.95m employees have benefitted from these programmes, amounting to 18.1% of total labour force.

HLIB’s VIEW

The outlook for labour market recovery remains optimistic with nationwide economic activity near full swing. There continues to be challenges from a wider spread of new and highly transmissive Covid-19 variants. Nevertheless, the acceleration of booster inoculations (as of 7th Feb, 53.3% of adult population have received booster jabs), declining trend in ICU admissions and manageable healthcare capacities allow for economic activity to normalise and lend further support to labour market recovery.

Source: Hong Leong Investment Bank Research - 9 Feb 2022