PETALING JAYA: Uncertainty surrounding geopolitical tensions, new coronavirus variants, and intensified business costs suggests that a full labour market recovery back to pre-pandemic levels is unlikely for now, according to UOB Research, even as Malaysia’s employment hit a record high of 69.2% in March 2022 and record year-on-year increase of 2.9% for Q1’22.
“The S&P Global Malaysia Manufacturing PMI survey in April revealed that businesses raised concerns of sustained price and supply pressure hampering operations, with material shortages and delivery delays. This played on firms’ expectations regarding future output, which fell to the lowest since last August. Further tightening of global financial conditions arising from US Fed’s aggressive and expeditious rate hike path has also weighed on sentiment,” UOB said in a report.
However, it said the overall labour market has improved for eight straight months, reinforcing its expectations of a sustained labour recovery through 2022. Malaysia’s transition to endemicity from April 1 and upliftment of most Covid containment measures by May 15 are key catalysts for the business and economic recovery ahead. The government’s ongoing policy support including numerous initiatives to generate and retain jobs under the Budget 2022 will also help to drive the labour market recovery as the year progresses.
MIDF Research said Malaysia’s unemployment rate is expected to trend lower this year underpinned by a further recovery in the domestic economy, continuous upbeat momentum in global trade, and coupled with skyrocketting commodity prices. With the announcement of international borders reopening, Malaysia’s labour market recovery remains on steady path following the possible return of non-citizens workers.
“However, we view the return of foreign workers would be in modest pace amid labour rules and Covid-19 measures that need to be satisfied. Hence, we skeep our average unemployment rate forecast at 4% for this year, higher than pre-pandemic level 3.4%.”
Looking ahead, MIDF expects Malaysia’s labour market to stay in steady recovery trend as indicated by job-vacancy rate which shoot to record high at 74.9% in Feb 22. On top of that, international borders reopening will push higher operating capacity in the domestic economy such as aviation, tourism, construction and manufacturing sectors. As an oil-exporting economy, Malaysia is set to benefit from the soaring global commodity prices particularly the palm oil and oil & gas sectors.
UOB maintained its year-end jobless rate forecast at 3.6% while MIDF at 4% for 2022.
Source: https://www.thesundaily.my/business/full-labour-market-recovery-unlikely-for-now-GG9181383