Malaysia labour market outlook for second half of 2009

Malaysia is on the right track towards economic recovery. This is something to cheer about since unemployment is worsening in most countries in the rest of the world. The second quarter improvement in Malaysian labour market marks a sentiment booster.

Data released by the Department of Statistics show that the unemployment rate in Malaysia had fallen to 3.6% in the second quarter, after rising to 4% between January and March, from 3.1% in the fourth quarter of last year.

Although the total labour force in the country during the quarter under review grew to 11.45 billion, compared with 11.2 billion in the preceding quarter, the sluggish economy still managed to provide some jobs to keep the number of unemployed individuals lower at 415.7 million in the second quarter, compared with 450.7 million in the first quarter.

But bear in mind, these are more than just numbers. The unemployment figures represent the anguish and despair of many individuals in the country.

And the official numbers could sometimes “under-report” this fact, as it only takes into account individuals “who are available for work at the current wage rate and are actively seeking jobs but could not find one”. It does not, for instance, count those who have given up looking for jobs and those are voluntarily unemployed.

Thus far, the unemployment situation in Malaysia is affecting mainly the manufacturing sector, which is represented by around 10% of the country’s total workforce.

Even so, the recovery of the local labour market seems to suggest that the measures taken by the Government under its fiscal stimulus packages to contain the rise of unemployment in the country are working.

To recap, under the RM60bil Mini Budget announced in March, the Government had endeavoured to create 63,000 contract jobs in the public sector and provide various incentives to encourage employers in the private sector to create jobs. These include doubling the tax deduction for those who hire retrenched workers.

As it is, the retrenchment of workers in the country has eased considerably, according to reports from the Human Resources Ministry.

The number of retrenched workers between April and June stood at 7,470, compared with 12,590 during the first three months of the year. Data as at the middle of September showed that the number of retrenched workers for the third quarter has dropped further to 2,274.

With the additional stimulus packages of RM1bil per month till the end of next year, as announced recently by Prime Minister Datuk Seri Najib Tun Razak, the local job market will most likely hold steady and weather the storm until the economy finds a stronger footing.

At the moment, though, the official estimate of unemployment for the full year of 2009 still stands at 4.5%.