Labour market recovery continued into the start of 2022 with the progression of all states to Phase 4 of the NRP. Employment grew at a steady pace (+0.2% MoM; Dec: +0.2% MoM), driven by services, manufacturing and construction sectors, while the labour force also grew +0.2% MoM (Dec: +0.2% MoM). Meanwhile, unemployed persons sustained its decline (-1.0% MoM; Dec: -1.0% MoM). The unemployment rate stood at 4.2% (Dec: 4.2%).

DATA HIGHLIGHTS

Labour market recovery continued in Jan with the progression of all states to Phase 4 of the NRP. In line with this, the number of unemployed persons declined further on a MoM (-1.0%; Dec: -1.0%) and YoY basis (-13.0%; Dec: -11.0%). Unemployment rate stood at 4.2% (Dec: 4.2%), the lowest since Mar 2020.

In terms of unemployment duration, the share of unemployed for less than 3 months increased (56.3%; Dec: 55.9%), while the share reduced for longer durations of 3 to less than 6 months (23.6%; Dec: 23.7%), 6 to less than 12 months (12.6%; Dec: 12.9%) and more than 1 year (7.5%; Dec: 7.6%).

Employment grew at a steady pace on a MoM basis (+0.2%; Dec: +0.2%) but ticked higher on a YoY basis (+2.9%; Dec: +2.8%). Growth continued to be driven by services, manufacturing and construction sectors, offsetting the 18-month long downtrend in agriculture and mining sectors. Services employment was mainly driven by wholesale and retail trade, food & beverages services and information & communication activities. By status of employment, own account workers rose +0.6% MoM (Dec: +0.5% MoM), while employees growth moderated (+1.5% MoM; Dec: +1.8% MoM). Meanwhile, the number of employed persons who were temporarily not working decreased to 93.5k persons (Dec: 126.7k persons), reflecting the continuation of business and social activities.

The labour force also recorded steady growth on a MoM (+0.2%; Dec: +0.2%) and YoY basis (+2.2%; Dec: +2.2%), reflecting increasing optimism on economic recovery. In line with this, the labour force participation rate inched higher to 69.1% (Dec: 69.0%), exceeding the pre-pandemic level of 68.7% back in Feb 2020.

Separately, SOCSO reported lower loss of employment (LOE) as of 25th Feb (2.6k; Jan: 4.6k), concentrated mostly in manufacturing and wholesale & retail industries. Location wise, LOE was most prevalent in Selangor (38.0%), KL (26.6%) and Johor (7.1%). As of 11th Feb, the government approved wage subsidy applications totalling RM20.36bn under its four wage subsidy programmes (PSU), thus maintaining the employment of 2.95m employees, amounting to 18.0% of total labour force.

HLIB’s VIEW

Malaysia is set to transition to an endemic phase on 1st Apr as pandemic severity indicators remained at manageable levels, which entails the removal of business hour limitations and reopening of international borders. This development is anticipated to benefit the tourism-related activities and late-night eateries, which bodes well for the labour market recovery, especially in the services sector. With the transition to endemic phase and reopening of international borders, this could also bode well for foreign labour shortage issue prevalent across sectors, especially agriculture sector.

Source: Hong Leong Investment Bank Research - 10 Mar 2022