Malaysia Sees Steady Jobless Rate Amid Sticky Youth Unemployment And Underemployment: Maybank IB

Malaysia’s unemployment rate was steady at 3.3% in Jan 2024 amid sustained pace of jobs growth (Jan 2024: +2.0% YoY; Dec 2023: +2.0% YoY) running above the steady labour force growth (Jan 2024: +1.8% YoY; Dec 2023: +1.8% YoY).

Maybank Investment Bank (Maybank IB) Chief Economist Suhaimi Ilias said today (Mac 11), but youth unemployment and under-employment rates remained sticky.

Maybank IB maintained their 2024 unemployment rate forecast of 3.4% (2023: 3.4%). Overall jobless rate firmly at pre-pandemic level Unemployment rate remained at 3.3% for the third consecutive month in Jan 2024, supported by stable employment growth (Jan 2024: +2.0% YoY; Dec 2023: +2.0% YoY) which continued to outpace the sustained labour force growth (Jan 2024: +1.8% YoY; Dec 2023: +1.8% YoY).

The number of unemployed declined by -4.8% YoY and -0.1% MoM (Jan 2024: 567.3k; Dec 2023: 567.8k).

According to the Department of Statistics Malaysia, jobs growth in Jan 2024 rose across all sectors such as Manufacturing, Construction, Mining & Quarrying and notably the Services sector like Wholesale & Retail Trade, Food & Beverage and Transportation & Storage, while employment in the Agriculture sector rebounded from Dec 2023.

Based on the lates monthly manufacturing statistics in Dec 2023, growth of manufacturing employment moderated (Dec 2023: +1.7% YoY; Nov 2023: +2.1% YoY) amid pickup in wages & salaries (Dec 2023: +3.7% YoY; Nov 2023: 3.4% YoY).

Notwithstanding the return of monthly jobless rate to pre-pandemic level, latest workers’ retrenchment data for Feb 2024 showed +18.3 YoY rise and -36.8% MoM fall to 3,654 in Feb 2024 (Jan 2024: +43.0% YoY and +25.0% MoM to 5,779), resulting in a +32.3% increase to 9.433 in 2M 2024 (2M 2023: -2.9% to 7,131; 2023: +45.6% to 49,982)

But “sticky” youth unemployment and underemployment rates

Youth unemployment also stayed at 10.6% for the third month in a row in Jan 2024 (Dec 2023: 10.6%) and it has been stuck in the 10.6%-10.8% range since Aug 2023, thus still above the pre-pandemic low of 9.9% in Dec 2019.

Meanwhile, the skills-related under-employment rate edged up to 11.9% share of total employed in 4Q 2023 (3Q 2023: 11.8%), staying within the 11.8%-11.9% level since 4Q 2022.

A major segment of informal jobs/workers in the economy i.e. “Own Account Workers” (i.e. daily income earners working as petty traders, hawkers, food stalls operators as well as smallholders, self-employed and gig workers) has been on an uptrend since Jan 2021 (2.39m) and reached a new peak of 3.01m in Jan 2024 (Dec 2023: 3.00m) as growth (Jan 2024: +4.7%) surpassed total employment growth (Jan 2024: +2.0% YoY).

Expect continued low unemployment rate in 2024

After moderating to 3.4% last year from 3.8% in 2022, Maybank IB expects unemployment rate to average 3.4% in 2024.

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