KUALA LUMPUR (Dec 8): The labour market in Malaysia is expected to fully recover in 2024, backed by encouraging momentum in the domestic economy and a reviving external front, economists said on Friday.
This comes after the Department of Statistic Malaysia (DOSM) announced that the country’s unemployment rate remained at the post-pandemic low of 3.4% for the fifth consecutive month in October.
Commenting on the announcement, MIDF Research said the unemployment rate is expected to average at 3.5% in 2023, and return to pre-pandemic levels at 3.3% in 2024.
“Continued improvement in the labour market will support consumer spending, as the wage recipients to employment ratio has reached a new peak at 64.6% in 2022, thanks to the minimum wage salary policy,” the research house said in a note.
The DOSM reported that the number of unemployed persons in Malaysia in October decreased 0.5% month-on-month to 570,999 persons.
The overall size of the labour force hit another record high at 16.97 million persons, with a labour force participation rate of 70.1%.
The number of employed persons also rose by 0.2% to 16.40 million persons, with the majority being employees (75.3%) and own-account workers (18.2%).
Chief Statistician Datuk Seri Mohd Uzir Mahidin said the labour market further strengthened in October, reflecting the encouraging current economic activities, with a continuous increase in the number of employed persons, while unemployment is declining.
UOB Global Economics & Markets Research, in an issued note after the DOSM announcement, also had a steady outlook on Malaysia’s labour market, with a full-year average unemployment rate forecast of 3.4% for 2023, and 3.3% for 2024.
In comparison, the Ministry of Finance has a full-year average unemployment rate forecast of 3.5% for 2023, and 3.4% for 2024.
UOB said its steady labour outlook is mainly supported by domestic demand, which is augmented by improving tourism activities, implementation of infrastructure projects, sustained foreign direct investment (FDI) flows, and a potential turnaround in external trade that should help sustain job opportunities.
“This would help cushion the risks from more moderate growth momentum, cautious business sentiment and lingering macro headwinds (i.e. global interest rate outlook, China’s property woes and geopolitical tensions), going into 2024,” it said.
Furthermore, UOB said bold policy reforms, such as the progressive wage mechanism that is expected to kick off in mid-2024, effective implementation of the national blueprints, and job-related measures announced under Budget 2024, are believed to help uphold the labour market recovery in the short- and medium-term.
“A stronger return of foreign tourist arrivals and an expected upturn in the global tech cycle, are also tailwinds for growth and the labour market recovery next year,” it added.