PETALING JAYA: Malaysia’s labour market is expected to remain steady throughout 2024, supported by an expansion in economic activities.
Kenanga Research, for one, has maintained its average unemployment rate forecast at 3.2% for this year, while UOB Bank Research has kept its estimate at 3.3% through 2024.
Malaysia’s unemployment rate stood at 3.4% in 2023. The Statistics Department revealed that the country’s jobless rate was 3.3% for both January and February this year.
“We expect the labour market to remain stable throughout 2024, reflected in the continuous employment growth observed recently. This is largely attributed to the expected steady expansion in economic activities driven by strong domestic demand,” Kenanga Research said.
It projected that gross domestic product (GDP) would expand 3.3% in the first quarter of 2024 (1Q24), an improvement from 3% in 4Q23.
Overall, Kenanga Research’s 2024 GDP growth forecast stood at 4.5% to 5%, up from the expansion of 3.7% in 2023.
“An expected recovery in the manufacturing sector, driven by the technology upcycle, as well as the realisation of approved investments recorded last year would further boost hiring activities in the coming months,” it said.
“Nevertheless, structural issues in the labour market remain concerning, namely, the persistent youth unemployment rate, which remained at 10.6% in February for the fourth straight month, standing at 306,600 people. Additionally, skills-related underemployment stands at 37.4%, reaching a record high of 1.94 million in 4Q23,” it added.
Similarly optimistic, Hong Leong Investment Bank (HLIB) Research said Malaysia’s labour market is expected to continue benefiting from a further rise in tourism activities and its positive spillover effect on tourism sectors such as wholesale and retail trade, food and beverage and accommodation, as well as the implementation of national projects.
“The improving global trade environment and implementation of foreign direct investment projects in the pipeline could also lead to better employment conditions in the export-oriented sectors,” HLIB Research said.
“In addition, the government will also be launching the National Human Resource Policy Framework in May, which will include guidelines and strategies in implementing future human capital development programmes.
“The framework is expected to help achieve the target of a 35% skilled workforce by 2030 (2023: 27.9%),” it added.
In an earlier report, UOB Bank Research said it expected several growth catalysts to keep Malaysia’s labour market conditions stable and in a technically “full employment” situation.
These include higher realisation of committed investments, ongoing infrastructure spending, improving tourism activities, recovering trade activities and catalytic projects outlined in the national master plans.
“While downside risks remain, they have yet to pose any material change to the labour market outlook at this juncture. Hence, we maintain our 2024 year-end unemployment rate projection of 3.3%,” it added.
