PETALING JAYA: Malaysia’s declining unemployment rate is a positive sign for the economy, said economist Geoffrey Williams.
However, he said the country lacks a comprehensive social protection plan for the unemployed, leaving individuals with little choice but to accept any available work to earn an income.
Williams was commenting on a Statistics Department report on the country’s second-quarter unemployment rate.
Its statistics of the labour force stated there were 577,300 unemployed individuals in August, down from 579,200 the previous month. However, the unemployment rate remained unchanged at 3.4% for three consecutive months beginning in June?
However, the department reported that the country’s unemployment rate contracted year-on-year by 0.4% in the second quarter of this year.
The number of unemployed individuals fell by 60,700 to a total of 581,400 compared with the second quarter of 2022, which recorded 3.9%, or 642,000 individuals.
Williams said the decrease in the unemployment rate is primarily a reflection of the need for income at any age, due to the rising cost of living.
“It does not indicate significant economic growth, as the national economy is growing slowly. Nor does it demonstrate economic stability, as employment growth is not driven by investment.
“Malaysia lacks a comprehensive social protection plan for the unemployed, which gives them little choice since the cost of living has made them accept any available work to overcome their financial crisis.”
He also said the number of self-employed individuals was increasing as people establish side businesses and micro-enterprises to generate additional income.
He added that these employment trends were predominantly market-driven and propelled by individual choices rather than government policies.
Williams said the country’s underemployment rate has a less visible side to it.
“Over 12% of the population is working limited hours or in jobs that are below their qualifications. Also, the unemployment measurement in the country is quite restrictive as it only considers those who have not worked at least one hour in the last week as unemployed.”
On migration and foreign workers, Williams said Malaysia is one of the largest migrant receiving countries in Southeast Asia.
“It has been attracting 2.2 million documented expatriates, foreign workers and skilled professionals in recent years, and this influx has had a positive impact on the labour market.”
However, Williams said expatriates, foreign workers and skilled professionals have little impact on the country’s unemployment rates.
“Foreign workers usually take low-paying jobs that local workers are not willing to accept. Therefore, they are not displacing local jobs.”
He said unemployment and underemployment predominantly affect middle-income groups and even in this category, foreign workers do not pose a challenge to them. He added that migrants have nothing to do with the unemployment rate and are largely irrelevant to the country’s growth prospects.
“It is important to note that the decrease in the unemployment rate should not overshadow the challenges faced by the Malaysian workforce. The main concerns lie in underemployment and low incomes.
“Despite the overall positive trend, certain sectors and regions continue to grapple with high unemployment rates. These disparities necessitate targeted interventions and policies to ensure the equitable distribution of employment opportunities.”
Williams said the government must strike a balance between attracting foreign talent and protecting the rights and welfare of local workers.
“Measures such as strict enforcement of labour laws, ensuring fair wages and providing training and upskilling opportunities for the local workforce should be prioritised to avoid any negative consequences of migration.”
