Malaysia’s labour market to strengthen in second half of 2022, says MIDF Research

Malaysia’s labour market is expected to further strengthen in the second half of 2022 (2H2022), underpinned by the return of workers from Indonesia today.

Indonesia’s ambassador to Malaysia, Hermono, reportedly said that Malaysia would today receive the first group of Indonesian migrant workers since the reopening its borders, with their arrival expected to ease the major labour shortage in palm oil plantations.

MIDF Amanah Investment Bank Bhd (MIDF Research) said the employment of labourers declined by 1.8% in 2020 and 2.9% in 2021 with more than 100,000 workers leaving the workforce due to the Covid-19 pandemic.

Non-citizen workers constitute about 10% of Malaysia’s working population.

“Malaysia’s unemployment rate is projected to trend lower this year to 3.8% in 2022 from 4.6% in 2021, underpinned by the domestic reopening and strong economic fundamentals,” the research firm said in a note today.

However, it said that the projected joblessness rate would still be higher than pre-pandemic 3.4%.

Employment growth is forecast at 2.5% (2021: 2.0%), while unemployment is expected to shrink by 15.0% this year (2021: +3.0%).

“In the first four months of 2022, employment growth stood at 3.0% year-on-year (y-o-y), and unemployment fell by 12.6% y-o-y,” it added.