Analysts have predicted that Malaysia’s employment market is expected to stay on expansion pace in tandem with industrial and external trade activities.
In a recent report on Malaysia’s employment market, the research team at MIDF Amanah Investment Bank Bhd (MIDF Research) commented: “The stable employment market is expected to impact positively on the economy, supporting private consumption as it drives the domestic economy through growing consumer optimism.”
“We predict the employment market to stay on expansion pace in tandem with industrial and external trade activities. We opine Malaysia’s jobless rate to remain under a full employment condition, with the unemployment rate of 3.3 per cent in 2019.”
The report also made note of the fact that Malaysia’s workforce also grew by two per cent year-on-year, the strongest gain in three months while employment growth maintained a steady rate at two per cent year-on-year, highest pace in four months with 45,200 jobs added in July 2019.
Despite the increase in in workforce size, the report also noted that the number of unemployed people as well as those outside the workforce rose by 1.2 per cent year-on-year and 2.3 per cent year-on-year respectively during the same month.
Nevertheless, the report also highlighted that Malaysia’s economy remains operating at full-employment conditions as jobless rate remains low at around 3.3 per cent. Having a stable employment market is vital for the Malaysian economy as it provides a strong pillar of support to the domestic demand.
Unfortunately, predictions for the future remains unclear. The ongoing trade war between the US and China continues to affect all economic powers negatively, including Malaysia. With trade disputes now erupting between Japan and South Korea, economic stress will continue to mount. Geopolitical factors in the European only adds fuel to the flames. These external factors will impact Malaysia’s export-oriented industries, especially manufacturing and eventually affect Malaysia’s employment numbers.
Despite this, the report states that industrial activities are expected to remain on expansionary path due to, among others, strong domestic demand, OPR cut effects, easing monetary measures by developed & emerging markets and positive progression in construction activities. This will eventually translate into net job gains, stable wage growth, and indirectly provide additional support to Malaysia’s domestic demand in 2019.
Malaysia’s current job landscape is dominated by low-skill jobs, which also make up the majority of job vacancies. The research team responsible for the report noted that this pattern is likely to continue. They did also note that said low-skill job vacancies were down to 64.8 per cent, with the remaining 35.2 per cent being medium and high-skilled job vacancies.
“Moving forward, we believe the dominancy of low skilled jobs will gradually decline and that high-skilled jobs will increase as we expect re-exports performance will continue trending downwards amid higher base effects and slowdown in global market especially for E&E sector. In addition, with the expected recovery in mining and agriculture goods, we expect domestic exports to continue its upward trend, offering more vacancies for medium and high-skilled jobs,” said the report.
