KUALA LUMPUR, July 14 — MIDF Research has maintained unemployment rate forecast at four per cent for the year, with unemployment to remain high over several months.
In a note today, the research house said some companies may have to resort to retrenching its employees to manage operating costs due to concerns over less encouraging revenue moving forward as overall economic activities will take time to fully recover.
“With activities in the economy gradually restarted and began to pick up, measures taken by the government through stimulus packages such as wage subsidy, employment insurance scheme and reskilling and upskilling initiatives will support employment to be more stable in the second half of 2020,” it said.
In addition, MIDF Research said the recovery in the international trade and the manufacturing sector will further support the job market, given the involvement of Malaysia in the global supply chain.
Malaysia’s unemployment rate climbed further to 5.3 per cent in May 2020, despite the government has allowed more businesses to reopen and resume its operations.
The higher unemployment reflected continued weakness in the job market as firms adjusted to the new normal and restarting its business operation after the movement control order (MCO).
During the month, MIDF Research stated that the employment fell further at -1.6 per cent year-on-year (y-o-y) (April 2020: -1 per cent y-o-y), while unemployment increased at a faster pace of 58.9 per cent y-o-y (April 2020: 48.8 per cent y-o-y).
“We foresee unemployment rate to stay at the current high level for the next few months before the recovery in economic activities will have a positive impact on the labour market,” it said.
Meanwhile, global unemployment rates inched higher as economies were adversely impacted by lockdowns to control the spread of Covid-19 cases.
While many economies have started to reopen after the lockdowns, the continued rise in coronavirus cases remains a downside risk for the job markets.
In the United States, the unemployment level remained elevated, although the US unemployment rate fell to 13.3 per cent in May 2020 (April 2020: 14.7 per cent).
The high level of unemployment rate indicates that it will take time for the job market to improve given the growing number of Covid-19 cases in the US, and elsewhere, the unemployment rates continued to increase in May 2020, indicating a challenging condition for the labour markets.
Moving forward, MIDF Research expects job markets across the world to gradually improve and unemployment rates will eventually inch lower as more countries reopened its economies. — Bernama
