FACULTY OF BUSINESS AND MANAGEMENT TRANSPORT

DIPLOMA IN BUSINESS STUDIES TRANSPORT BA117

BA1173A3

GROUP ASSIGNMENT MICROECONOMIC :

’UNEMPLOYMENT DUE TO COVID19’

PREPARED FOR :

DAYANGKU ROSHAZIANAH AWANG HASSAN

PREPARED BY :

STUDENT NAME STUDENT ID

MOHD AZMEZANSHAH BIN SEZWAN 2019846216

NURUL AIN IKHWANIAH BINTI MANSOR 2019421618

SHYLISISCA LIVING 2019684978

NURUL IMAN BINTI MANSHOR 2019462808

DATE OF SUBMISSION: 1/02/20

 ACKNOWLEDGEMENT

In the name of Allah Most Gracious and Most merciful.

First of all, Alhamdulillah praise to Allah SWT for giving us the opportunity to finish this report
successfully. With the strength He gave to us, it helps us to find the materials and
information that are needed to finish this report up.

Moreover, we would like to say special thanks to our beloved lecturer for this subject
Macroeconomics (ECO211), Madam Dayangku Roshazianah Awang Hassan

for her kindness and her time spent for us. She has taught us how to solve problems and
give us directions to finding information.

Last but not least, we would like to express our gratitude to our groupmates. This report
could not have been possible without the participation and guidance of each group member.
Their contributions are sincerely appreciated gratefully acknowledged.

We have completed our report and we hope that our report will be received. We had used
our effort and acknowledgement to search ideas and information. We hope our effort was
worth it.

Thank you.

I
 CONTENT

NO PAGE

Aknowledgment I
Content II

1.0 Introduction 1-2

2.0 Objective 3

3.0 Analyzing current Macroeconomic problems 4-7

4.0 Discuss appropriate measures to overcome 8-9

5.0 Conclusion 10 - 11

Reference 12

II
1.0 INTRODUCTION

Unemployment is defined as a situation when individuals who can work and want to
work at a certain level of wages failed to get any job. Unemployment is one of the issues that
are often faced by both developed and developing countries and the poor. Unemployment
problems usually occur because of the economic situation that's experiencing a recession
and insufficient employment opportunities because of limited quotas. Unemployment occurs
when someone can work and wish to work but cannot get employment.

They are classified within the labor of a country, namely those who are 15 to 64
years old and willing to work. they're the economically active group to fill job vacancies within
the labor market. In an exceeding society where most of the people can earn a living by
running their own business or working with others, unemployment could be a significant
issue. There are various forms of unemployment which are friction unemployment occurs for
temporary unemployment during search time. Structural unemployment is the gap between
the qualifications or position of employees and job demands. Seasonal unemployment such
as agriculture or agriculture due to changes in seasonal economic activities.

Unemployment in Malaysia is relatively small and steady at about three percent

means that the country is close to full employment. In 2014, the country reached its lowest
unemployment rate at 2.85 percent. The industry has been a major contributor to GDP
generating around 30 percent of job prospects at the moment. Although more than 50
percent of the services industry generates GDP. Given the strong and growing economy in
the country, the average GDP per capita is also growing at an increasing rate. However,
given this optimistic figure, the majority of job applicants and three hundred unemployed are
mostly young people including students and non-graduates who have difficulty entering the
labor sector. Therefore, the Malaysian government urges businesses for employment
opportunities to remain open to young adults. A positive economic climate will be beneficial
but there have also been some domestic concerns about unemployment and gender
inequality.

It’s implications include loss, rejection, and private failure, and since unemployment
is widely used to measure employee welfare. The unemployment rate also indicates the
extent of efficiency of human resource consumption of a country. In the opinion of Keynes
economists, a state with an unemployment rate of 4% or less shows that the country has
reached full employment rate. Germany, as an example, has an unemployment rate of about
5.3 percent, France (9.1 percent), and therefore the united states (3.7 percent) in 2018. In
April 2020, the unemployment rate in Malaysia increased to a record high of 5 percent from
3.4 percent in the same month a year ago, in the light of the suspension of activities during

1
the Movement Control Order concerning the COVID-19 pandemic for most businesses. The
number of unemployed grew to a record high of 778.8 thousand by 48.8 percent, while jobs
dropped to 14.93 million by one quarter.

2.0 OBJECTIVE

2
1. The objective of this assignment is as down below:

2. To analyze the issue of macroeconomic which is unemployment that increasing due to

pandemic Covid-19.

3. Define unemployment.

4. To solve or overcome the issue of macroeconomic, unemployment using the Fiscal

Policy and Monetary Policy.

5. To analyze the effects of the unemployment issues.

3
3.0 ANALYZING CURRENT MACROECONOMIC PROBLEMS

FIGURES 1

FIGURES 2
 FIGURES3

At the end of December 2019, a phenomena disease unknown in Wuhan, People's

Republic of China (PRC) has shocked the world and may only cause the world economy to
be disabled if the pandemic is not well attempted. The world has become a problem, and
many of man's daily activities have been required and industrial production has been related.
In March 2020, the WHO announcement that COVID-19 had become a pandemic had a
direct impact on production industry, including in Malaysia. The Government of Malaysia has
implemented the Movement Control (MCO) Order from March 18, 2020 to April 28,2020 in
order to prevent the spread of COVID-19. Accordingly, all economic activities must be
postponed, except for the essential sector, which is only allowed to operate during the MCO.

The implementation of MCO has an indirect impact on economic activity, particularly

in the manufacturing sector. Several manufacturing industries are permitted to continue to
operate across the CPP, including fire and medical equipment, including fire safety
equipment and medical equipment (for example facial masks, rubber gloves, pharmaceutical
equipment, all chemicals and medicines, packaging and other equipments), throughout the
CPP. Manufacturing is subject to MITi's Food & Drink approval.

Malaysia's current macroeconomic problems during the covid19 pandemic continue

to smoke, with a score of 48.4 points in March 2020 compared to 48.5 points in February
2020. PMI for most of the countries involved in COVID-19 CPP below 50 points (gloomy).
The lack of new orders from importing countries, the scarcity of supplies, and slowdowns in
export and import activities are some of the factors that reduce PMI. In addition, Malaysia's
IPI grew by 5.8% in February 2020. The CPP will have an effect on IPI March 2020 from 18
to 31 March 2020. The Malaysian manufacturing sector is expected to have an effect on
Malaysia's leading trade IPI with COVID-19 affected countries such as China, the USA,
Japan and Korea. In particular, the downturn in the country's activity would impact demand
involving the supply chain. After the outbreak of the COVID-19 outbreak, China's IPI has
dropped to its lowest level.

Moreover, Cyclical unemployment is that the main explanation for high

unemployment rates. Its caused by a downturn within the trade cycle while the Covid-19
issue some of store or company instructed close while the pandemic to recover . It's a part of
the natural rise and fall of economic process that happens over time.Cyclic unemployment is
permanent and depending on the duration of economic contractions caused by a recession.
Added in this pandemic more effection will effect the people to through the increase
economic to live in this generation life is very difficult to ensuring personal needs.

While cyclical unemployment starts, economies are usually already in recession.

Businesses usually wait until they are confident that the downturn is important enough to
require unemployment before beginning them. That cause the industry demand for products
and services decreases, production drops. This drop reduces the need for jobs, which
induces unemployment. Consumers then have to spend less, further contributing to a loss of
revenue, this, in turn, causes companies to hire off more employees in an effort to retain
their profit margins.

In other side, Most economies argue that some cyclical unemployment is not
reversible. When unemployment increases in the recession, the business boost does not fall
back to the previous level. The point is that employees have lost skills as part of
unemployment in a recession. Assume, for instance, that a worker is made unemployed and
is unable to find a job within a year due to the depth of the recession. Within a year, the
employer would be hired to take on the worker. They fear that employees have lost basic job
skills and begin to question whether or not they have maintained general work skills, such as
the ability to show up to work on time. As said before, widespread restrictions on shelter can
prevent laid-off workers from actively looking for jobs and reporting that they are not
unemployed.
 In addition, The excess supply of labor on the economy is also the product of
unemployment. This condition is also commonly used with problems often affected by rural
areas or even backward effects in a country due to the Covid-19 pandemic and
consequently unable to provide jobs for their respective residents. In urban areas and in
developing countries, however, the problem of unemployment is also present, even in the
developed countries. The issue is caused by vacancies that for some reasons cannot be
filled. If the jobless party or the party's own boss comes from it. The factors causing this
unemployment are thus often seen in terms of demand for labor or supply, which are less
caused by the pandemic.
4.0 DISCUSS APPROPRIATE MEASURES TO OVERCOME

There are ways to overcome unemployment issues during this time of pandemic, we
need to decreased the tax creadit to prevent a loss happend. Within under the new relief bill
signed in law March 18th, a company business that had less than 500 workers will have tax
credit assistance in their production. While the employers that required a need to pay a bil
and other financial thing like new sick and family leave benefits, most of the cost are
refundable by tax credit that against the payrool’s tax. They will recive an additional paayroll
tax credits, if the employmeers workimng on COVID-19 sick or faily leaves for group health
plan costs. In order to make this happened, implement expansionary fiscal policy in to
economic activities which is often used during an economic downturn, where in our case
Malaysia is in situation of high unemployment.

The way the government reduce unemployment is to increase their spending which
will directly in effect the aggregate demand, that will close the deflationary gap, this is cause
by government spending creates demand for goods and services. At the same time, the
government may lower the taxes to increase the aggregate demande curve. The result will
increase in production and expansion in economy, in the end of result aggregate demand
curve will curve to the right.

G↑ --------→ AD↑ = C + I + G↑ + X – M

T↓ --------→ Yd↑ → C↑ → AD↑ = C↑ + I + G + X – M

 For example, as we can see this diagram above is the way to explain how the fiscal
policy solves the problem of unemployment. When G increasing and the T decreasing, there
is an increase in AD the process and the outcome will finally solve the problem.

Next, is skilled labour storage, in the modern era we are in now many techenology
has advance and take over most of the work to help fill the gap, in some point it still need
human capabilities in analize and solve problems as well inclued manage the output during
pandemic. In the years where many older generation entering retirement, the manufacturing
industry facing a growing shortage of manpower. this is one of the most serious threats to
face for nowdays manufacturing sector. To overcome this kind of situation when it come
hiring prospective workers, the producer must be ensure to hire someone that can work
efficiently, sharp on time, under demand and does not object to any changing schedules.

Futhermore, manufacturers had to able provide regular training for their new and
existing employees to help increased their potential. Thus, to hiring this kind of employees
government should implement expansionary monetary policy by making the bank central
lowering the bank rate, it will help to expand the economy by decreasing the funds which is
affect the economic activity. Thus, making the loan cost less to borrow for spending and the
frims will incrasing the investment by hiring more workers. Implementing expansionary
monetary policy into Malaysia’s economy activity will reduce the unemployment rate.

Beside that, to overcome this issues is to increased the job growth in Malaysia even
more, in this point the goverment need to involed to help. The government need to create
freshly new employment include the older one to move into a new era, the reasons creating
a new job will maintain economic growth inside the country and give other people an
oppurtunity to find a jobs. Other that that, it also increase the morale when people who are
working and ptoviding themselve. It stabilizes the economic growth , which means the new
job will create a demand and eventually create earn.

Other than that, cut the interest down, in this time of pandemic many people will got
fired from their job cause the business company doesn't get any demand. If the central bank
cut the interest low, the company will get lot demand and hence will eventually hire a
potential workers to work into their company. The reason to lower the interest rate because
many people couldn't get their normal wage in this time of pandemic and wil hardly buy
anything because of the price plus many employees has been fired since the COVID-19 has
spread it. Furthermore, this solution will encourage the public to spend their money, it will
eventually decrease cyclical unemployment.
5.0 CONCLUSION

The unemployment rate can be handling. The effects of positive and negative shocks
on the labor not balance. In particular, the consequences of shocks differ significantly
consistent with the phase of the cycle. In particular, during periods of economic expansion,
the shocks have effects on unemployment of longer duration and lower magnitude than the
shocks during periods of recession where unemployment has a growth behavior in "step" but
trend stationary. A key conclusion that emerges is that, given the asymmetric behavior of
unemployment resulting from the dynamic transition between phases of growth and decline
of the economy, the speed of mean reversion of the percentage is extremely slow. However
it is not possible to reject the hypothesis of global stability structuralism unemployment. The
permanent effect of shocks in the labor market during periods of expansion, it is necessary
to implement active employment policies in times of economic growth rather than
recessions, where the effects of any single measure will be transient.

During these time all economic activities were affected by MCO the government want
to measure to prevent the spread of Covid-19 outbreak. Malaysian society were having
problem with unemployment before, where they get stuck to working, especially for small
business entrepreneur, some of them have an opportunity and willing to work but they
cannot obtain work until today. Based on observations some of them already try to send so
many job request applications before. This group of age trying to get involved with
manufacturing sector, unfortunately manufacturing sector were affected too. On march 2020
this year, government was declared MCO will be implemented right. By having announce
from government state a few rules to all industries and sector.

Both of this economic sector are order to close their premise even though MCO have
been affected some factor, the government found out some alternative which is trying too
helped to something slightly clear to allowed to continue operate for delivery services
because this indicate the essential service is estimate to contributed more than seventy
percent to eight percent of manufacturing sectors, while only fifth percent of the workers,
Malaysia economic growth such as export including manufacturing sectors and more than
eight percent are suitable to be exported.

MCO issues transmission Covid-19 will affect Malaysian economic sales and reduce
exports. These days many people feel uncertain about their future, the unemployment rate
increase compared than a previous year before, if the economic downturn increase it will
increase the poverty rate and total unemployment in the country. Malaysia major for supply
chain will change trading partner, this literally cause import and export activities. Malaysia is
undergoing recover from the covid-19 deployment crisis. To recapitulate, the manufacturing
sector when intermediate goods and forms of capital will having suffer a decline in the supply
chain as most countries have been implemented lockdown and exist orders.
REFERENCE

1. Zainul, E. (2020). Malaysia's unemployment rate will continue to rise as economy slows
down, says World Bank. Retrieved 12 December 2020, from
https://www.theedgemarkets.com/article/malaysias-unemployment-rate-will-continue-
rise-economy-slows-down-says-world-bank

2. Bernama (2020a) Chronology of Covid-19 in Malaysia Retrieved from: 

https://www.newsarawaktribune.com.my/chronology-of-covid-19-in-malaysia

3. WHO Now Says China Did Not Report Virus Outbreak, But Gave Info Only After WHO
Inquired. (2020). Retrieved 12 December 2020, from
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did-not-report-virus-outbreak-gave-info

4. Olivia, T. (2020). Post-Pandemic World: Perspectives on Foreign and Security Policy.

Retrieved 12 December 2020, from https://www.curteaveche.ro/p/post-pandemic-world-
perspectives-on-foreign-and-security-policy

5. Lim, I. (2020). Malaysia’s jobless shot up to 826,100 in MCO-era in May, most

unemployment in 2020 yet | Malay Mail. Retrieved 12 December 2020, from
https://www.malaymail.com/news/malaysia/2020/07/14/malaysias-jobless-shot-up-to-
826100-in-mco-era-in-may-most-unemployment-in/1884305

6. Jalal, A. (2020). The problem of unemployment during and after MCO. Retrieved 12
December 2020, from
https://www.freemalaysiatoday.com/category/opinion/2020/04/28/the-problem-of-
unemployment-during-and-after-mco/

7. Chronology of COVID-19 in Malaysia - New Sarawak Tribune. (2020). Retrieved 12

December 2020, from https://www.newsarawaktribune.com.my/chronology-of-covid-19-
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8. Anderton, A., Anderton, A., & Anderton, A. (2000). Economics teachers' guide.

Ormskirk: Causeway.