Labour force improves in March, but challenges ahead

Labour force improves in March, but challenges ahead

10 May 2021

Malaysia’s unemployment rate has improved in March 2021 at 4.7% with 753,200 unemployed persons, lower than 777,500 recorded in February 2021.

Department of Statistics Malaysia (DoSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the Recovery Movement Control Order (MCO) in most states and Conditional MCO in several other states in March have contributed to the labour improvement, unlike last year during the first MCO.

The number of labour force rose by 0.2% or 34,300 individuals in March to 16.08 million persons.

The labour force participation rate also increased to 68.6% last month, compared to 68.5% in February.

“During the month, the number of employed persons continued to increase by 0.4% (up 58,700 persons) to 15.33 million persons (February 2021: 15.27 million persons).

“Since April 2020, the number of employed persons was on a year-on-year (YoY) declining trend, but for the first time after eleven consecutive months, the number of employed persons registered a positive YoY growth of 0.6% (up 96,900 persons),” he said in a statement last Friday.

The employment-to-population ratio, which indicates the ability of an economy to create employment, stood at 65.4%.

The number of employees increased by 76,800 to 11.95 million individuals in March.

Besides that, own-account workers improved by 48,300 to 2.48 million individuals in March from 2.43 million in the previous month.

“The increase was in line with the permission for small businesses such as retailers, food stalls and hawkers to resume. In addition, the employed persons who were temporarily not working during the month continued to trend down to 121,000 persons following the continuous resumption of almost all business activities during the month,” he said.

By economic sector, the number of employed persons in services continued to increase in March, primarily in wholesale and retail trade; food and beverage (F&B) services, education and human health and social work activities.

Employment in manufacturing and construction sectors continued to trend up.

In contrast, employment in agriculture, mining and quarrying sectors remained to decline.

Overall, Mohd Uzir said the labour force continued to improve in the first quarter of 2021 (1Q) to 16.01 million persons due to signs of economic recovery.

The number of employed persons increased 0.5% to 15.24 million persons, particularly in the services, manufacturing and construction sector.

The unemployment rate in 1Q stood at 4.8% for 771,800 unemployed persons.

Mohd Uzir said six states recorded a lower unemployment rate compared to the previous quarter ranging from 0.1 to 0.5 percentage points, namely Perak with an unemployment rate of 4.6%, Negri Sembilan (3.7%), Terengganu (3.7%), Melaka (3.6%), Kedah (3.6%) and Penang (3.5%).

Meanwhile, 10 states, including three Federal Territories, recorded increases in labour force participation rate during the quarter except for Johor, Kelantan, Penang, Perak, Perlis and Selangor.

“Further recovery in Malaysia labour force may be more certain with the resumptions of most business activities coupled with the expansion of Covid-19 vaccination programme to a larger community.

“Nevertheless, this positive momentum will subject to the uncertainties in the country’s health condition and subsequently the economic performance. The rising number of daily Covid-19 cases in Malaysia had prompted the implementation of Restricted MCO in targeted areas and MCO in certain states, namely Kelantan, Sabah, Selangor and Kuala Lumpur in May 2021,” Mohd Uzir said.

He said the labour force might face some challenges in the forth-coming months.

However, he said the encouraging labour market improvement observed in 1Q could continue its recovery momentum, albeit at a moderate pace.

On separate statistics, DoSM revealed that the country’s volume index of services fell 3.6% to 123.4 points in 1Q compared to 127.9 points in the same quarter last year.

Other services segments recorded -25.2%, and wholesale and retail trade; F&Bs; and accommodations segments registered -3.8%.

Mohd Uzir said that for quarter-on-quarter comparison, the volume index of services also recorded a decrease of 0.3% to 123.4 points than the same quarter of the previous year.

He said the seasonally adjusted volume index of this sector saw a growth of 2.3% to 123.7 points compared to the previous quarter, mainly contributed by the business services and finance segment with a growth of 5.3%.

Source: The Malaysian Reserve