KUALA LUMPUR (Nov 9): Economists said Tuesday they expect a firmer recovery of Malaysia's labour market going into the fourth quarter of 2021 and into 2022, after its total employment hit a new high in September.

UOB Global Economics and Market Research economists Julia Goh and Loke Siew Ting said in a note the labour market recovery will be underpinned by an almost full economic re-opening of the whole country from Nov 8, positive vaccination progress, and over RM8.5 billion allocation to generate and sustain jobs under Budget 2022.

According to them, key initiatives include JaminKerja that will guarantee 600,000 job opportunities with an allocation of RM4.8 billion, the continuation of hiring incentive and the Malaysia Short Term Employment programme (MySTEP) — which aims to provide 80,000 job opportunities next year — as well as an allocation of RM1.1 billion for various upskilling and reskilling programs.

“Hence, we reiterate our year-end unemployment rate forecasts of 4.2% for 2021 and 3.6% for 2022,” they said.

The Ministry of Finance earlier projected unemployment rate forecasts of 4.6% to 4.8% for 2021, and 4% for 2022.

The Department of Statistics Malaysia (DOSM) announced on Tuesday the unemployment rate continued its downward trend in September to 4.5%, registering 729,600 unemployed persons.

Its chief statistician Datuk Seri Mohd Uzir Mahidin said the labour force situation improved further in September as employment continued to increase while unemployment was on a declining trend.

“The transition of more states into the next phases of the National Recovery Plan (NRP) has allowed more business activities to resume while business hours have been extended. In addition, the permission of inter-state travelling in the Klang Valley area coupled with the reopening of domestic tourism industries in Terengganu and Pulau Langkawi also fostered more economic activities during the month. All these positive circumstances have reinforced the labour market to regain its momentum,” he added.

Meanwhile, total employment in September rose 0.6% month-on-month to a record 15.46 million persons.

According to UOB Global Economics and Market Research, the growth also marked the largest monthly gain since June 2020, predominantly driven by increased hiring in the services, manufacturing, and construction sectors.

As for the third quarter, the number of employed persons rose by 0.4% to 15.27 million persons from 15.21 million persons in the second quarter, underpinned by services and manufacturing sectors.

The unemployment rate also fell to 4.7% by recording 746,200 unemployed persons, as compared to 4.8% unemployment rate and 764,900 unemployed persons in the second quarter.

“The current health crisis situation in the country appears to be improving with the total number of daily Covid-19 cases [decreasing] while the number of fully vaccinated [individuals] is increasing,” said Mohd Uzir.

In October, all states were in Phase 3 and Phase 4 of the NRP, thus allowing the full movement of inter-state travel. These relaxations have encouraged more travelling activities within the country thus increasing demand for goods and services.

Mohd Uzir said the continuous dynamic economic activities will accelerate the recovery process of the businesses, and subsequently attribute to the increase in labour demand resulting in the creation of more job opportunities.

“The country’s economy is most likely to pick up in the upcoming months indicated by better performance of the leading index. In line with this, gradual improvement in the labour market is anticipated in the particular period,” he added.