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Malaysia's labour market still broadly stable

Publish date: Thu, 09 Feb 2023, 06:48 PM

KUALA LUMPUR: Malaysia's labour market conditions remained broadly stable in December 2022, with both unemployment rate and labour force participation rate holding unchanged at 3.6 per cent and 69.8 per cent respectively, UOB said.

UOB said this was aligned with full operation of all economic activities for nearly one year amid persistent scaring effects of the Covid-19 pandemic on the economy. 

For the full year, unemployment rate averaged 3.9 per cent (2021: 4.6 per cent), remaining above the pre-pandemic 2015-2019 long term average of 3.3 per cent.

UOB said the latest performance of all labour market indicators continued to affirmed its view of a slower recovery momentum in Malaysia's labour market since July 2022. 

"For instance, total hiring posted the smallest rise in nearly one and a half years while inactively unemployment jumped for the sixth straight month. 

"Labour force also posted the slowest gain in 17 months while more workers started to drop out of the workforce in Dec 2022," it said.

UOB added that although China's reopening from Jan 8, 2023 had spurred optimism for Southeast Asia including Malaysia's tourism sector and growth recovery this year, the impact might be more gradual in the first half of 2023 amid capacity constraints and inflation risks.

Other lingering economic headwinds include more restrictive global monetary policy settings, an escalation of geopolitical tensions, weaker-than-expected global demand, and ongoing global tech downcycle also suggest a cautiously optimistic outlook for the economy and labour market this year.

"In view of the fore-mentioned downside risks, it is important to watch for any additional job-related initiatives that will be introduced when the new Unity Government re-tables a national budget for 2023 on Feb 24. 

"In the initial Budget 2023 proposal that was unveiled on Oct 7, 2022, several job-related measures worth at least RM950 million were announced.

"Taken together, we maintain our year-end unemployment rate forecast at 3.2 per cent for 2023 (versus official estimate: 3.5-3.7 per cent, end-2022: 3.6 per cent)," it said.

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