THE unemployment rate is expected to decline in the latter half of 2021 as the economy recovers, said economists.

Joblessness could dip to around 4% by year-end, they said. It was 4.8% in December.

The unemployment rate last year, most of which was passed under the shadow of the Covid-19 pandemic, was 4.5%. The last time unemployment in Malaysia rose to such a level was in 1993, when it hit 4.1%, the Statistics Department said.

Economics professor at the Sunway University Business School, Dr Yeah Kim Leng, said unemployment soared to 5.3% in May 2020 before dropping slightly in the last quarter.

“It will likely deteriorate slightly in the coming months before improving on the back of the stronger economic recovery anticipated in the second half.

“The unemployment rate is forecast to inch down to 4% by year-end,” he told The Malaysian Insight.

Unemployment could worsen temporarily because of the second movement-control order, which came into effect on January 13. All of Malaysia except for Sarawak is under MCO 2.0 until February 18.

“The second MCO, although less restrictive, will negatively impact the retail, hotel, restaurant, tourism and entertainment industries already hard hit by the pandemic and associated containment measures,” he said.

Senior research fellow at the Malaysian Institute of Economic Research Dr Shankaran Nambiar said the unemployment rate is not expected to reach the heights of 5.1% and 4.7% recorded in the second and third quarters of 2020.

“There will be a reduction in unemployment in Q2 2021 should there be a further relaxation of the MCO by the end of February,” he said.

“With the anticipated vaccine rollout, there will be further improvement in economic activity. This will be reflected in a more positive labour market, with the unemployment rate likely receding to 4.5% by early Q3.”

Shankaran said under the present circumstances, the bottom 40 (B40) households are most at risk of losing their jobs.

“Aside from the measures that discourage the movement of people and have more people working from home, those in the informal sector, those earning daily wages and those in micro-enterprises are at greatest risk.”

Yeah agrees that the effects of unemployment are most sorely felt by the B40 group, not least because the group forms a large segment of society.

Retrenchments have taken place across all income segments, he said, including in the supervisory and managerial levels, albeit in smaller numbers.

Chief statistician Dr Mohd Uzir Mahidin said recently the unemployment rate in December 2020 was 4.8%, or 772,900 people.

Meanwhile, the number of employed persons edged up 0.1% month-on-month to 15.22 million people, after registering a marginal decrease in the previous month. – February 11, 2021.