• Despite recent announcement of re-imposition of containment measures in the country, we believe the drag and negative impact will be less severe as most businesses under current SOPs are allowed to operate
• The cumulative number of unemployed persons declined to 753.2k in March from 777.5k in February
• We expect the country’s unemployment rate to range between an average of 4.0-4.5% in 2021 (4.5% in 2020).

Total Employment Increased by 58.7k to 15.33mn in March

Malaysia’s unemployment rate improved and fell by 0.1 percentage point to 4.7% in March from 4.8% in February. The cumulative number of unemployed persons declined to 753.2k in March from 777.5k in February, where on a monthly basis, the number of unemployed persons improved and fell by 24.4k in March, as compared to 5.0k in February. According to Department of Statistics (DOS), the improvement during the month was attributed partly to some relaxation of movement restriction from reinstatement of CMCO and RMCO since early March. Despite the recent announcement of re-imposition of containment measures in select locations in the country, we believe the drag and negative impact will be less severe on economic activity as most businesses under current SOPs are allowed to operate.

In March, the labour force rose by 34.3k to 16.08 million persons (+28.4k in February), rising for the eleventh month in a row. The labour force participation rate (LFPR), which is the ratio of labour force to working age population increase by 0.1% to 68.6%. The total employment increased by 58.7k to 15.33mn in March from 15.27mn in February. It was guided that employment in the services sector, especially in wholesale and retail trade, human health and social work, and education activities were showing improvement during the month, together with increased in the manufacturing and construction sectors. During the month, the increase in employed persons continued to be higher than the increase in unemployed persons for the fourth month in a row, reflecting continued improvement in the labour market conditions and better demand by businesses. Based on SOCSO statistics, loss of employment (LOE) or retrenchment data in April improved and fell to 4.97k from 5.79k in March, due likely to the reopening of the businesses as certain restriction measures were eased.

Going forward, we believe the recent reimplementation of MCO and restricted MCO may slow down hiring in some sectors of the economy in the months ahead, but the softness in labour market condition will likely be manageable, as most businesses are allowed to operate under current SOPs. The implementation of domestic vaccination programme might also assist to lift business confidence. While there are some uncertainties of possible delay and the challenge on roll-out of vaccines domestically, we believe policy measures and implementation of stimulus measures since 2020 and in early 2021 have helped to reduce the severity of economic burden of lockdowns on households and businesses. Key policies under PRIHATIN, PENJANA, Budget 2021, PERMAI, and PEMERKASA packages, access to the Micro Credit Scheme and micro-SME special grants, as well as enhanced hiring incentives, supported the labour market. We expect the country’s unemployment rate to range between an average of 4.0-4.5% in 2021 (4.5% in 2020).

Source: Affin Hwang Research - 7 May 2021