UOB global economics and market research expects Malaysia’s labour market conditions to stay stable at “technically full employment” after February 2024’s unemployment rate stayed at 3.3 per cent. UOB said in a note today that higher realisation of committed investments; ongoing infrastructure spending; improving tourism activities; recovering trade activities and catalytic projects which are outlined in the national master plans are some of the catalysts for this. “While downside risks remain, they have yet to pose any material change to the labour market outlook at this juncture,” it said. According to UOB, external risks primarily stem from geopolitical tensions and stringent financial conditions.
“The internal downside risks are chiefly relating to domestic policy reforms including tax changes such as higher services tax rate at 8 per cent, introduction of high value goods tax and implementation of e-invoicing, subsidy rationalisation and progressive wage mechanism,” it added. As a result, UOB maintains their projection for Malaysia’s unemployment rate at the end of 2024 at 3.3 per cent, aligning with estimates from Bank Negara Malaysia (BNM) and previous projections for the end of 2023.
Malaysia’s labour market continued to exhibit favourable patterns in February, characterised by record-high levels of both the labour force and employment, alongside a stable national unemployment rate of 3.3 per cent for the fourth consecutive month. “The high employment-to-population ratio also points to high ability of creating jobs with the labour force participation rate holding at a record level of 70.2 per cent,” it said.
In February, all major economic sectors in Malaysia saw continued growth in hiring, notably led by the services sector, including wholesale and retail trade, food and beverage services, and transport and storage activities. “Most job opportunities were in the formal sector, with 75.2 per cent of workers as employees and 3.6 per cent as employers,” the firm said. UOB added that the informal sector, represented by own-account workers, comprised only 18.3 per cent of total recruitment, while unpaid family workers made up the remaining 3.0 per cent.
