Recovery of Malaysia’s labour market continued as the unemployment rate stayed at 3.6% in Oct-22. Youth aged 15~24 unemployment rate is still at a double-digit rate of 12.1%, more than a two-year low but remained higher than pre-pandemic (2019: 10.4%).
Labour force and employment continued expanding +2.6%yoy and +3.4%yoy, respectively, supported by robust domestic economic growth and a still upbeat external front. Unemployment dropped further by -14.6%yoy, marking the 14th consecutive month of contraction rate.
In addition, the outside labour force was reduced by registering the 12th straight month of negative growth rate. By type, employment growth was driven by the employer, self account worker and unpaid family workers. The employee segment which represents 75.9% of total employment grew steadily. However, the job patterns have shown signs of moderation in the economy amid a bleak external outlook dampened by possibly weakening global demand.
Looking at next year, MIDF believes Malaysia’s job market to continue benefiting from the firm domestic demand, international borders reopening, the revival of construction projects, and expansion of primary sectors thanks to elevated global commodity prices and modest external trade activities. In addition, the house views post-GE15 will reduce domestic politics temperature and allow for better & smooth implementation of fiscal policy. MIDF believes stimulus bullets for labour market recovery and domestic economic growth will be among the major elements in the upcoming Budget 2023 and midterm review of the 12th Malaysia Plan.
Labour market in Malaysia is expected to strengthen further in 4QCY22 underpinned by upbeat momentum in the domestic economy and steady expansion in the external sector. Following domestic reopening and strong economic fundamentals, Malaysia’s unemployment rate is projected to trend lower this year to 3.8% in 2022. However, the projected jobless rate is still higher than the pre-pandemic 3.4%. As of 10MCY22, the jobless rate averaged at 3.86% while employment growth at +3.6%yoy and unemployment fell by -15.1%yoy.
Moving into 2023, MIDF foresees Malaysia’s jobless rate to skid further at an average of 3.5% on the back of an improving domestic economy, an uptick in tourism-related activities and higher output capacity in primary sectors as commodity prices stay elevated
