Malaysia’s unemployment rate could hit 6% or more this year, higher than the rate during the 1997 Asian Financial Crisis or 2008 recession when unemployment rose to 3.2% and 3.7% respectively, says AmBank Group Research. This follows reports that the unemployment rate in April climbed to 5% from 3.9% in March, the highest since 1990.
Chief economist and head of research Anthony Dass said in a note today that the closure of business operations during the movement control order (MCO) period had slashed jobs and made it harder for jobseekers to find employment. As a result, the number of unemployed people jumped by 48.8% year-on-year to 778,800 in April while the total number of unemployed people for the first four months of the year hit 2.4 million.
Citing a survey by the statistics department, he said there had been 2.59 million people operating their own businesses in April, largely traders, smallholders and tour operators. “These groups were exposed to the risk of job and income losses following the MCO. The survey also showed that the MCO affected 4.87 million employed persons who were not working in April 2020. “This group of people is not categorised as unemployed as they have jobs to return to,” he said.
Dass said the upward pressure on the number of job losses remained, and that much would depend on the ability of businesses to weather the current challenges. He said there remained a high risk of companies going under, in addition to those undergoing restructuring exercises and engaging in mergers and acquisitions. “It is unclear how the labour market will be when the wage subsidy programme, which started in April, ends as it provided financial relief to employers facing revenue constraints and saved 2.2 million jobs.
“Although government incentives aimed at retaining employees and the gradual reactivation of the economy following the conditional MCO and recovery MCO in May and June could ease some of the burden, it may not take the weight off instantly considering an estimated 500,000 new entrants to the labour market this year,” he added.