Malaysia’s job market to improve in 2023 amid external concerns, says MIDF Research
10 Jan 2023
The labour market is expected to strengthen further in 2023, underpinned by upbeat momentum in the domestic economy and modest expansion in the external sector, said MIDF Research.
It noted that Malaysia’s average jobless rate is expected to descend from 3.8% in 2022 to 3.5% in 2023, but slightly higher than the pre-pandemic level of 3.3%.
“Malaysia’s job market in 2023 is anticipated to continue benefiting from firm domestic demand, China’s reopening, the revival of construction projects, expansion of primary sectors thanks to elevated global commodity prices, and modest external trade activities.
“In addition, we view that the recently-concluded general election should reduce domestic politics temperature and allow for better and smooth implementation of fiscal policy,” the research house said.
MIDF Research said initiatives for labour market recovery and domestic economic growth should be among major elements in the upcoming re-tabling of Budget 2023 and the mid-term review of the 12th Malaysia Plan (12MP).
It said steady expansion in primary sectors, as well as construction and services will prop up more employment opportunities next year, thereby labour force and employment are predicted to pick up by +1.6% respectively this year.
MIDF Research also noted the continued recovery of Malaysia’s labour market, with the unemployment rate staying at 3.6% in November 2022.
“The labour force and employment continued expanding +2.5% year-on-year (y-o-y) and +3.2% y-o-y, respectively, supported by robust domestic economic growth and upbeat external front.
“Unemployment dropped further by 13.5% y-o-y, marking 15 consecutive months of contraction rate,” it said.
MIDF Research also said that for the youth aged 15 to 24, the unemployment rate was still at a double-digit rate of 11.9%, more than a two-year low, but higher than the pre-pandemic rate (2019: 10.4%).
On the other hand, it said that outside labour force had also reduced by -1.5% y-o-y, registering the 13th-straight month of negative growth rate.
By type, MIDF Research shared that employment growth was driven by employers (+8.8% y-o-y), self-account workers (+8.4% y-o-y) and unpaid family workers (+5.5% y-o-y).
Meanwhile, the employee segment, which represents 75.9% of total employment, grew steadily by +1.8% y-o-y.
MIDF Research however highlighted that the job patterns have shown signs of moderation in the economy, amid a weakening external outlook.
The research house said that the registered number of job vacancies in Malaysia was 326,300 in October 2022.
In the first 10 months of 2022, job vacancies remained the highest at 412,200 on average, it added.
“This reflects a strong recovery in domestic economic activities, fuelled by robust local demand and continuous expansion in the external sector.
“There is a better take-up by high-skilled occupations such as legislators, professionals and associate professionals.
“By sector, we notice a steady pick-up in agriculture, services and construction sectors, possibly induced by elevated commodity prices, strong consumer demand, international borders reopening and revival of infra projects,” it said.