UNEMPLOYMENT IN MALAYSIA

https://www.ilmia.gov.my/index.php/en/component/content/article/2-
uncategorised/53-tableau-unemployment?Itemid=275

Introduction & Background

The unemployment rate (KILM 9) together with the employment-to-population
ratio (KILM2) are the most well-known statistics utilized for explaining the
labour market situation at any point of time in most countries around the world.
KILM 9 is a stock indicator of employment for which further dynamic
situational insights may be obtained through analysis of inflows and outflows of
unemployment between observations periods. Information on unemployment
flows contribute to a better understanding of variations in unemployment
resulting from changes in the pace workers move from a status of employment
to one of unemployment and vice versa.
Unemployment as defined by 13th International Conference of Labour
Statisticians (ICLS) in 1982 refer to a worker “………. who during the
reference period was without work, was seeking work in a recent period and is
currently available for work………”. Mathematically the unemployment rate is
calculated as a ratio resulting from dividing the total number of unemployed by
the total working age population or the economically active portion of the
population (or the workforce as defined in KILM 1: Labour Force Participation
Rate). In Malaysia the working age population is composed of persons 15-64
years old. By definition the workforce would be composed of the sum of the
total persons employed and the unemployed.

There are several issues related to this definition of unemployment. The most
important one is the person who is currently without a job, who potentially
could be available for work but nevertheless in currently not actively seeking a
job – this person is not considered to be among the unemployed because he/she
is also not part of the workforce. Following KILM 1, in general, the working
age population who are not in the labour force are those persons who are in
learning or training institutions; those who are retired and have no intention of
re-joining the labour market; those who are physically or mentally or health-
wise unable to work and those who are otherwise not actively looking for work.
People who want to work but are not actively seeking work are sometime
referred to as the “hidden unemployed”. This segment of the population whether
by choice or circumstances are not in the workforce because they may have
become disillusioned from past job search attempts and limited job
opportunities, faced discrimination or cultural barriers, and have limited job
mobility or relocation problems. Some countries consider that this definition of
unemployment based on the need to be actively seeking work may not be very
helpful, especially for an economy where informal economic activities are
prevalent and many people are engaged in self-employment activities. To cater
for these anomalies, the 19th ICLS in 2013 created a separate category of
“potential labour force” which would be able to accommodate potential job
seekers who may not have been actively seeking out a job to be counted as part
of the unemployed.

The information for KILM 9 in Malaysia uses the 1982 13th ICLS definition of
unemployment and is captured through Labour Force Surveys conducted by
Department of Statistics of Malaysia (DOS) using the household survey
methodology.

Why KILM 9 is important?

KILM 9 provides a measure of workers that are without a job within the
workforce. It is usually accepted that an unemployed worker would be
considered to be in an undesirable situation. Nevertheless, in some situations
short-term unemployment could be considered normal, particularly if the
economy is undergoing structural adjustments to better long-term economic
sustainability, resulting in the shedding of jobs in failing industries and their
replacement hopefully with better jobs in new growth areas. Unemployment
may result from short-term or cyclical (seasonal) factors or from more
complicating structural or longer-term competitive issues where possible policy
responses would differ markedly. In some countries, the trends in the
unemployment rates over time are also used to reflect business cycle conditions,
with recessionary episodes often associated with higher than usual and/or
prolonged unemployment rates.
In this connection, government policies during a down business cycle are
usually directed at lowering unemployment to an appropriate level. In the
economic literature there are voluminous research on what this appropriate level
of unemployment should be and which policies are more effective in restoring
employment to the economy sustainably. Analyst have developed a notion that
unemployment should not be pushed below a “natural unemployment” level
beyond which a trade-off involving accelerating inflationary impulses begin to
manifest themselves.[1] Associated with this natural employment level is the
concept that an economy is enjoying “full employment” if the level of
unemployment is close to 3% or below. This level of unemployment may be the
natural rate in the sense that the persons who are unemployed are considered to
be in-between jobs, either through the normal process of leads and lags in
changing jobs, or has the luxury to afford a longer search time to look for a
replacement job which satisfy their desire (often referred to as frictional
unemployment).
For many countries, unemployment rates can be further disaggregated by
gender, age groups, occupation, economic sectors and geographically which
provides useful information for addressing the vulnerabilities of any of these
group of workers facing joblessness. For example, unemployment rates for
women are generally higher than for men, which in most instances reflect the
fact that jobs suitable for women are in narrower categories compared to those
available for men. But most importantly, women have traditionally been most
subjected to unemployment stemming from more numerous instances of exit
from and re-entry into employment because of family-related issues and
obligations. Access to education and training schemes may also have an
influence on the unemployment status of women and their success is securing
decent jobs.
While the unemployment rate may be the most important indicator of hardship
suffered by the workforce, there are other supplementary labour market
indicators that have to be viewed together in combination to offer a more
wholesome view of worker joblessness difficulties. The unemployment rate
measures the utilization level of the workforce and the inability of the
proportion of workers actively searching for jobs to secure one. Other
information on the educational qualifications, work experience, socio-economic
background and even ethnic origin may have additional relevance. An important
issue is whether there is a worker safety net for a worker who faces
unemployment. These should include unemployment insurance benefits,
redundancy payments from a previous job and access to employment services
providing job search facilities, retraining or upskilling possibilities and
relocation assistance to new growth areas.
While it is obviously desirable that a country would want to experience low
employment rates, this indicator by itself may also conceal some underlying
economic problems. Low unemployment could be closely linked to high
incidences of poverty, particularly in less developed economies. In poorer and
less developed countries in the absence of worker safety nets and effective
social welfare systems, a person cannot afford to be without a job to survive and
must eke out a living whether in the formal or informal economy. A person may
be considered employed even if working just one hour during the week. Thus
even if a person is not unemployed, he/she may still be faced with a dire
financial situation due to the number of hours work, the wage rate, the location
of the job, and other aspects that would need to be taken into consideration, to
gauge the living condition of the worker. KILM 9 would need to be seen in
conjunction with other indicators to provide a broader picture of the condition
of the labour market; including the hours of work under KILM 7; KILM 2:
employment to population ratio; KILM 12: time related underemployment;
KILM 13: inactivity rates; KILM 3: status in employment; and KILM 18:
working poverty and labour productivity. In combination, trends in the different
components of the labour market may be evaluated with greater
comprehensiveness to address the issues faced by the workforce.
The availability of statistical information on unemployment flows may
contribute to a better understanding of why high unemployment persist in an
economy. The dynamic factors which affect flows into unemployment can often
be separated from the factors that affect the flows out of unemployment. The
information provides insights into the speed which workers become
unemployed following an economic disruption and how fast they are able to
find re-employment and where. It can also contribute to estimating probabilities
that a worker would become unemployed or when unemployed, the probability
of getting another job. This information contributes to the design of policies to
understand and address distress in the labour market affecting employment or
unemployment. For Malaysia, information on inflows and outflows of
unemployment are not yet well developed for analysis purposes.

Limitation/ Comparability

Due consideration must be given when making cross country comparisons of

the unemployment rates, because as is a common issue for all KILMs
differences would naturally arise from variations in data collection and
estimation methods which each country utilizes. For KILM 9, other than labour
force surveys (LFS), some countries also rely on population census, household
surveys and official estimates in the presentation of the unemployment rate.
Many countries (especially developed economies or those with unemployment
insurance benefits) also show data for the registered unemployed, as compared
to the total unemployment derived from LFS. There are also differences arising
from the “potential labour force” where the notion of actively seeking work has
been granted a more relaxed definition, thus giving rise to measurement
anomalies in both the unemployment rate, the employment ratio and even the
labour force participation rate.
Also the number of observations during the year on the unemployment situation
may account for differences. In countries where there are greater frequency of
observations, seasonality factors affecting the workforce would generate
differences compared to countries with less frequent or only annual
observations. Some countries may have geographical limitations in their
collection of employment and unemployment data, and thus may only limit
collections to urban settings or selected large cities, which of course is then not
representative of the country as a whole. It is observed that unemployment in
urban areas tend to be larger than for rural settings, wherein economic activities
are largely agricultural and where workers have less of a choice and are more
likely to be employed, whether they are under-employed, self-employed,
informal workers, or unpaid family workers.
The differences in measures of unemployment may also come from variations
in the conceptual framework underlying the meaning of a person actively
searching for work. If a country follows the ILO convention, then a person
actively looking for work should be using one or more of the following methods
– a) applying directly to vacancies on offer by employers; b) visiting an
employment exchange office if such services are available; or c) otherwise
soliciting jobs by other means, e.g. by joining a job queue for contractors
seeking daily helpers, visiting work sites like construction or farms, consider
starting a self-employment or business scheme, etc. For example, some
countries consider consultation of vacancy advertisements in a newspaper as
meeting the active job search criteria. Whereas others consider that this is not
sufficient and the workers must actually take steps to apply for the position
before they are considered to be searching. In some countries, like in the
Caribbean, discouraged workers who have withdrawn from looking for jobs are
still considered to be among the unemployed.

Moving forward

Future analysis would include disaggregating the unemployed workers by their

educational qualifications, to the extent that such information is available and
are sufficiently representative. It is also anticipated that benchmarking would be
undertaken of the unemployment rates with countries in ASEAN and similarly
situated economies from other regions. It will also be useful to look into options
for collection of inflow and outflow information of unemployed workers to
better understand trends in the labour market and their links to changes to the
economic structural make-up of growth in the nation.
CASES IN MALAYSIA

https://www.thestar.com.my/news/nation/2023/08/10/malaysia039s-
unemployment-rate-down-to-34pc-in-june-2023

PUTRAJAYA: Malaysia's unemployment rate declined 0.1 percentage points to

3.4 per cent in June 2023 from 3.5 per cent recorded in the previous month,
according to the Statistics of the Labour Force, June and second quarter 2023
released by the Department of Statistics Malaysia (DOSM) on Thursday (Aug
10).

Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin (pic) said the number of
unemployed persons reduced to 581,700 from 584,600 persons previously.
He said Malaysia's labour market remained stable in June 2023 contributed by
the continuous increase in the number of employed persons, while the
unemployed persons were on a downward trend despite the economic outlook
being projected to expand moderately.

"Therefore, the number of the labour force in June 2023 strengthened further by
0.2 per cent to record 16.89 million persons from 16.86 million persons in
May," he said.

Mohd Uzir said June’s labour force participation rate (LFPR) meanwhile, was
unchanged at 70 per cent, as recorded in last month.

Mohd Uzir said the number of employed persons in June 2023 remained on a
positive trend with a month-on-month increase of 0.2 per cent to record 16.31
million persons in June 2023 compared to 16.28 million persons previously.
Out of the total employed persons in June 2023, 75.4 per cent were in the
employees' category which recorded an increase of 0.1 per cent to 12.30 million
persons from 12.29 million persons in May 2023, he said.

The number of own-account workers also surged by 0.5 per cent to register 2.95
million persons from 2.94 million persons previously, he said.

By economic sector, Mohd Uzir said employment in the services sector

remained on an upward trend, mainly in food and beverage services, wholesale
and retail trade as well as transportation and storage activities.

He said the number of employed persons in the manufacturing, construction,

mining and quarrying as well as agriculture sectors also exhibited increases
during the month.

He said the actively unemployed or those who were available for work and were
actively seeking jobs, comprised 80.3 per cent of the total unemployed persons,
and this category decreased by 0.8 per cent to 466,900 persons from 470,400
persons previously.

Among the actively unemployed, 61.1 per cent were those who were
unemployed for less than three months, while 6.6 per cent were those who had
been in long-term unemployment for more than a year, he said.

The inactively unemployed or those who believed that there were no jobs
available, registered an increase of 0.5 per cent to 114,800 persons from
114,200 persons previously, he said.

The unemployment rate for youth aged 15 to 24 years in June 2023 remained at
11 per cent recording 312,400 unemployed youths from 313,000 previously,
while the unemployment rate for youth aged 15 to 30 years declined by 0.1
percentage points to record 6.9 per cent, with the number of unemployed youths
at 446,800 persons from 448,600 persons previously, he said.

As for the inactivity group, the number of persons outside the labour force in
June 2023 continued to reduce, with a marginal decrease of 0.02 per cent to
7.23 million persons from 7.23 million persons previously, he said.

"This was mainly due to housework or family responsibilities with 43.5 per
cent, followed by the schooling or training category at 39.9 per cent," he said.

Mohd Uzir said the overall performance for the second quarter of 2023, the
number of the labour force continued to post an increase, with a rise of 0.5 per
cent to 16.73 million persons from 16.65 million persons recorded in the first
quarter.

He said the number of employed persons increased by 0.5 per cent to 16.15
million persons during the quarter from 16.06 million persons previously, while
the number of unemployed persons declined by 0.9 per cent to 581,400 persons
from 586,900 persons previously.

The unemployment rate in the second quarter of 2023 remained at 3.5 per cent
as in the previous quarter, he said.

"The labour force's position in the upcoming months is expected to continue to

grow steadily in line with the expectations of Malaysia’s Leading Index, which
anticipates a good economic outlook in the coming months," he said.- Bernama

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TAGS / KEYWORDS:DOSM , Unemployment , Rate , Labour Force

https://www.nst.com.my/news/nation/2023/06/917434/malaysias-
unemployment-rate-35pct
(By Mohamed Basyir - June 7, 2023 @ 12:58pm)

KUALA LUMPUR: Malaysia's unemployment rate continues a downward trend

to 3.5 percent for the first quarter of this year, the Dewan Rakyat was told
today.

Malaysia recorded 4.1 per cent unemployment rate in the first quarter of last
year.

Deputy Minister of Human Resources Mustapha Sakmud said youth

unemployment rate for the first quarter of 2023 has also dropped by one percent
to 10.1 percent compared to 11.1 percent in the same period the previous year.

He said Sabah reported the highest unemployment rate at 7.7 percent.

He said the high unemployment rate among the youth is a global phenomenon
faced by most countries.

"The government continuously formulates and implements various initiatives

across ministries and agencies to help reduce the overall unemployment rate,
including among urban and rural youth.

"Amongst them are through MyFutureJobs platform with more than a million
job vacancies, including 148,000 for professionals," he said in reply to a
question from Datuk Seri Dr Shahidan Kasim (PN-Arau).
https://www.thestar.com.my/business/business-news/2023/01/10/malaysia039s-
unemployment-rate-down-to-36-in-november-2022

(Tuesday, 10 Jan 2023, 3:40 PM MYT)

PUTRAJAYA: The number of unemployed persons declined to 600.9 thousand
persons, recording an unemployment rate of 3.6%, according to the Statistics
Department (DOSM).

“In November 2022, the labour market further strengthened in line with the
development of current economic activities. Thus, the labour force situation
continued to expand during the month, with a continuous increase in the number
of employed persons while the number of unemployed persons decreased,”
chief statistician Datuk Seri Dr. Mohd Uzir Mahidin said in a statement.

“Therefore, the
number of labour
force remained
increasing in
November 2022,
with an addition
of 0.2% month-
on-month to
16.71 million
persons (October
2022: 16.68
million persons),
while the labour
force participation
rate rose by 0.1
percentage points
to register 69%
(October 2022:
69.7%),” he
added.

At the same time,

the number of
employed persons
continued to increase by 0.2% month-on-month to 16.11 million persons
(October 2022: 16.08 million persons).

In November 2022, the number of persons outside labour force continued to

decline with a reduction of 1.6 thousand persons (-0.02%) to 7.24 million
persons (October 2022: 7.24 million persons).

DOSM said housework/ family responsibilities were the main reasons for the
outside labour force with 43.1%, followed by schooling/ training with 41.3%.

In terms of economic sector, the services sector continued to register positive

growth in the number of employed persons, particularly in wholesale and retail
trade; food & beverage services and information and communication activities.

In the meantime, the manufacturing, construction and agriculture sectors also

posted increases in the number of employed persons, while employment in the
mining & quarrying sector recorded a rise for the first time since July 2020.

“The continuous operation of all economic and social activities until the end of
2022 has enabled the country's economy to continue to grow rapidly.

“In this regard, the labour market is also expected to continue to maintain its
recovery momentum towards a more stable labour market and be more
favourable in line with the current positive economic developments, especially
in early 2023,” Mohd Uzir said.