How the third wave could affect unemployment rates in Malaysia?
Malaysia has been tirelessly battling the COVID-19 pandemic from the beginning of the year. Since the third wave of the COVID-19 outbreak in early October, the conditional movement control order (CMCO) has been implemented nationwide. This in return explicably leaves the Malaysian labour market compromised. Furthermore, stricter and prolonged restrictions would have a long term effect on the country’s economic activities in the long term, instilling fear in many employees, employers and job seekers.
With that being said, what exactly should we be expecting in terms of unemployment and its for the rest of 2020? In June, with the lockdowns relaxed Malaysia’s economy showed early signs of recovery. The Malaysian labour market had also substantially improved in July. The Department of Statistics Malaysia had revealed that the unemployment rate fell from 5.3 per cent in May and 4.9 per cent in June. The unemployment rate in July stood at 745,100, a decline of 28,200 people compared with the previous month.
With the situation the nation currently foresees, the possibility of a recurring Movement Control Order (MCO) on top of the current CMCO will only debilitate the economy even further. “The recent surge in COVID-19 infections and tightening of Controlled Movement Control Order (CMCO) in Sabah, Selangor, KL, and Putrajaya, is expected to put a strain on the labour market recovery. The unemployment rate is expected to remain elevated between 4.7%-5.0% in the coming months” says senior economist Julia Goh and economist Loke Siew Ting at the UOB Group. This is a very drastic increase from Malaysia’s unemployment rates in February and March of 2020 prior to the initial Covid-19 restrictions. The expected elevated unemployment rates also foreshadows more businesses halting operations and frequent layoffs, like we’ve seen with AirAsia and Media Prima this year.
A prolonged CMCO, another MCO or even an emergency for this matter will only escalate the layoffs and it will be tough for the labour market to recover in the future.
Written by: Narmatha Raja
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