Malaysia's labour market situation improved in Q3 2021, but yet to return to pre-pandemic level

Dr Mohd Uzir Mahidin, Chief Statistician Malaysia, shared that the gradual recovery in the labour market in Q3 2021 was "supported by the transition to the National Recovery Plan". He also anticipates a better labour market situation in Q4 2021.

Malaysia’s labour market situation has yet to return to the pre-pandemic level as of Q3 2021, after witnessing moderate improvement in quarter-on-quarter employment, according to the Department of Statistics Malaysia's (DOSM) latest report, Labour Market Review: Third Quarter 2021. 

Employment and unemployment

In Q3 2021, the report revealed, the number of employed persons recorded a marginal increment of 1.2% year-on-year, compared to an annual rise of 2.2%. This translates to 15.27mn employed persons, with the employment-to-population ratio dropping 0.1 percentage points (pp) to 65.1%. On the other hand, Malaysia's unemployment rate remained elevated at 4.7%, which saw the number of unemployed persons rise marginally by 0.2% to 746,200 persons, as compared to Q3 2020.

Dr Mohd Uzir Mahidin, Chief Statistician Malaysia, shared that the gradual recovery in the labour market in Q3 2021 is "supported by the transition to the National Recovery Plan". It is noteworthy that this was achieved when most states remained in either the first or second phase of the NRP—which meant only between 60% to 80% of private sector’s employees were allowed to work at-site on a rotational basis.

On that note, the number of employed persons working less than 30 hours per week, therefore, increased 13.7% compared to the same quarter in the previous year, to record 464,600 persons. In a similar trend, the rate of time-related underemployment also rose to 2.1%. As for skill-related underemployment, the report noted that it remained high at 37.7%.

Labour demand and productivity

Looking at the demand for labour in the economic sector, the labour market saw jobs continue to decrease (0.8%) as against a year ago to 8.406mn jobs. In the same time period (Q3 2021 versus Q3 2020), filled jobs, which is at 97.9%, has, in fact, reduced by 0.7% to record at 8.232mn. As for job vacancies, the number dropped by 3% to 174,000.

Labour productivity per employment declined by 5.6% (RM21,985) in Q3 2021, while labour productivity per hour worked continued to drop at an improved pace of -0.6%, although Malaysia's labour market registered a marginal increase in employment. In addition, the number of total hours worked dropped 3.9% to 8.21bn hours due to "limited business operations". Thus, labour productivity per hour worked continued to decrease from RM41.1 in Q3 2020, and RM40.5 in Q2 2021 to RM40.9 in Q3 2021.

Dr Mahidin said: "With the shrinking labour demand and increasing number of potential new entrants into the labour market, continuous reform is required in scaling up jobs opportunities. Hence, long term ideal interventions may enable better absorption of labour supply into the labour market, and ultimately guarantee a rise in efficiency, as well as a better economic growth prospect."

In this regard, he noted that seamless integration of macro statistical indicators and detailed labour market databases across agencies will provide a better chance at frequent and consistent monitoring of the labour market flow and stocks.

"Further to this, strategic collaborations between public and private sectors will also provide the nudge towards facilitating consistent talent and capacity building; as well as increasing investment in research and technology as part of the strategies to restructure the economy and facilitate skilled jobs creation," the Chief Statistician added.

Q4 2021

Dr Mahidin anticipates the Malaysian economy to regain, and consequently influence more demand for labour, as well as contribute towards a better labour market situation in Q4 2021. This is because not only has the public health situation "appeared to be improving", but vaccination efforts have also been accelerated which allowed more economic activities to resume, and selected restrictions to be lifted. These are positive developments the economy can leverage, he noted.

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Image / Department of Statistics Malaysia (DOSM)

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