Statistics Dept: Malaysia should redeploy its unemployed surplus labour to essential services industries

KUALA LUMPUR, May 29 — Malaysia needs a dynamic labour market policy in order to address a labour market disequilibrium which was the result of the Covid-19 pandemic and movement control order (MCO) put in place to control the disease’s infection rate.

The Department of Statistics Malaysia (DOSM) has found in its Malaysian Economic Survey Review (MERS) that labour surplus in industries that have been badly hit by the pandemic such as accommodation and retail should be redeployed to other industries.

Its chief statistician Datuk Seri Mohd Uzir Mahidin said in the report that although the hospitality, travel and tourism industry has been adversely affected by the global lockdown, other industries providing essential services are in need of extra manpower.

“Labour surplus in affected industries such as accommodation and retail need to be redeployed to industries that have seen a surge in labour demand in order to maximise productivity.

“In the short term, labour shortages are foreseen in essential services industries namely health, agriculture and food-based industry as the demand increases in these industries. Therefore, these sectors have the potential to absorb labour who faced job losses.

“Individuals facing this hardship would definitely find ways to secure jobs and income generation opportunities, by striving towards increasing marketability and adaptability to meet demand in different and emerging sectors,” observed Mohd Uzir in the survey review.

He added that the skill gap can be narrowed through the various training, upskilling, reskilling and cross-skilling programmes offered by various agencies such as Socso, the Human Resource Development Fund and MARA, among others, to help workers overcome this issue.

At the same time, he also warned that if the government failed to address this concern and keep the unemployed busy with new jobs, there could be civil unrest as people struggle to put food on the table.

Furthermore, he added that the disruption in labour demand for new graduates entering the market is also expected in the second half of this year and it is vital to ensure that this group of people as well as those who are currently unemployed are occupied to avoid social unrest.

Mohd Uzir pointed out that the repercussions of the outbreak and MCO have only begun to show slight disruptions in the labour market in the first quarter of 2020 (1Q20).

“The current status of labour demand and supply for the quarter gave us early signal of disequilibrium in the labour market.

“The labour market developments and prospects within the next quarter are expected to be considerably weaker following the economic ramification of three more phases of MCO which would affect the whole of April before Conditional MCO kicked off since the first week of May.

“As the new normal set in and various operating procedures are designed to balance health concerns with economic recovery and sustainability, a noticeable shift is expected to occur within the various economic sectors.

“This, in turn, will affect the labour market dynamics as demand for labour may fall in particular industries yet rise in the others,” Mohd Uzir noted.

In 1Q20, the labour force in Malaysia stood at 15.8 million persons. It had grown by 1.7 per cent year-on-year (y-o-y) compared to 2.1 per cent in 4Q19.

Labour force participation rate (LFPR) increased by 0.1 percentage point to 68.8 per cent from 68.7 per cent in the same quarter of preceding year. This translated into another 31.2 per cent of the working age population of 15 to 64 years old being outside the labour force.

1Q20 also saw the unemployment rate went up by 0.2 percentage points from 1Q19 to 3.5 per cent. The number of unemployed persons during the same period rose by 30 thousand to 546.6 thousand as the unemployment rate in March rose sharply to 3.9 per cent.

In terms of labour demand, total jobs in the private sector during 1Q20 which comprised filled jobs and job vacancies went up by 17 thousand to 8.6 million as compared to 8.5 million in the same quarter of the preceding year.

Following the slower growth of filled jobs and decrease in job vacancies, the number of jobs during this quarter grew marginally as compared to the past four quarters in 2019.

The rate of filled jobs reached 98.1 per cent after consistently recording the rate between 97.1 per cent to 97.7 per cent, translated into 8.4 million jobs in this quarter.

“However, the increase of 52,000 filled jobs in this quarter was lower compared to the annual increases of the previous quarters in 2019 which ranged from 83,000 to 128,000.

“Inversely, the rate of vacancies fell below 2 per cent to 1.9 per cent after registering 2.3 per cent in 4Q19. In terms of numbers, job vacancies dropped 35 thousand as compared to a year ago to 166 thousand.

“The decline of job vacancies was due to the cautionary steps taken by the industry amid slower economic performance of the country,” said Mohd Uzir, adding that the job breakdown saw that 24.3 per cent were skilled jobs and 62.4 per cent was semi-skilled while low-skilled jobs stood at 13.3 per cent.

Although 1Q20 saw a slower economic momentum, it still managed to create 19,000 jobs but it is still a decrease of 5,000 from 24,000 in the same quarter last year.

The new jobs were created mostly in the first two months of 2020 with 48.3 per cent being skilled jobs and 45.7 per cent in the semi-skilled category.

The report added that capital intensive industries with adoption of high technology and automation had been proven to be more resilient when compared to labour intensive industries.

“For instance, labour intensive segments of the Services sector such as Food Beverages and Accommodation registered a decline in value added per employment as opposed to Finance and Insurance which sustained, as well as Information and Communication which improved.

“The use of automation allowed for flexibilities for business operations to adjust swiftly in the face of crises, hence providing business sustainability while maintaining productivity,” said Mohd Uzir.

Touching on remittances by foreign workers in Malaysia to their countries of origin, the chief statistician noted that in 1Q20 outward remittances recorded a drop to RM7.4 billion as compared to RM7.7 billion in 1Q19.

The decrease in remittances has contributed towards the lower deficit in secondary income at RM5.4 billion as against RM5.5 billion in the previous quarter.

Basically, the marginal decrease was due to the first phase of MCO that affected the operation of businesses and subsequently caused pay cuts and loss of jobs.

The remittances’ value is anticipated to decline sharply due to the economic uncertainty induced by the Covid-19 outbreak and MCO in the month of April and May 2020 that have affected the operation of industries, larger fall in wages and increased unemployment.

“Likely, foreign workers tend to be more vulnerable to loss of their jobs and salaries during this outbreak. 

“Before the Covid-19 pandemic, numerous concerns were raised on high reliance on foreign workers as secondary income recorded higher deficit due to increasing remittances outflow.

“Among the lessons learnt from the Covid-19 outbreak, establishments in Malaysia should explore more on shifting the businesses towards high technologies and high skilled labours in order to reduce the dependency and influx of foreign workers,” Mohd Uzir advised.