KUALA LUMPUR (April 8): Economists foresee sustained recovery in Malaysia’s labour market this year after its unemployment rate eased to a near two-year low of 4.1% in February, from 4.2% in January.

UOB Global Economics and Markets Research economists Julia Goh and Loke Siew Ting said in a note on Friday (April 8) that they are keeping to their view of a sustained recovery in the labour market through 2022, despite uncertainties surrounding geopolitical tensions, pandemic and business costs, and reiterated their year-end unemployment rate target of 3.6% as compared to 4.2% at end-2021.

The country’s transition to endemicity from April 1 with the reopening of borders will be a key positive driver for business recovery and economic growth revival, they said.

They also said the government’s ongoing policy support including numerous initiatives to generate and retain jobs under Budget 2022 are also key to underpin the labour market recovery as the year progresses.

However, they noted that lingering risks from the pandemic, geopolitical tensions and US Federal Reserve’s (US Fed) tightening path will likely hinder a full labour market recovery to pre-pandemic levels.

Businesses remained cautious given the unfolding crisis in Ukraine with rising possibility of broader and prolonged sanctions against Russia, as well as tighter global monetary conditions as US Fed embarks on a more aggressive and expeditious tightening path, they added.

Likewise, MIDF Research expects Malaysia’s jobless rate to trend lower this year, underpinned by a further recovery in the domestic economy, continuous upbeat momentum in global trade, and skyrocketing commodity prices.

With the announcement of international borders reopening, it believes Malaysia’s labour market recovery remains on a steady path following the possible return of non-citizen workers.

“However, we view the return of foreign workers would be at a modest pace, amid labour rules and Covid-19 measures that need to be satisfied. Hence, we keep our average unemployment rate forecast at 4% for this year, higher than pre-pandemic level 3.4%,” it said in a separate note.

According to the Department of Statistics Malaysia (DOSM) statement on Friday (April 8), Malaysia’s number of unemployed persons continued to fall in February, as it slid 1.3% to 671,800 persons from 680,400 persons in January.

Meanwhile, employed persons in February grew 0.3% month-on-month to 15.73 million, recording a higher employment-to-population ratio of 66.3% as compared to 66.2% in January.

The number of labour force, on the other hand, continued to increase month-on-month, rising by 0.2% to 16.40 million persons.

Labour force participation rate during the month remained unchanged at 69.1%.