Commentary: Malaysia’s prospects for economic recovery remain bright, but not everyone may be lifted

Commentary Malaysias prospects for economic recovery remain bright but not

SINGAPORE: As Malaysia rolls out its COVID-19 vaccination marketing campaign and the economic system trundles towards full capability, the prospect of recovery has brightened.

The nation will hope to flee the pendulum sample of progression-regression skilled previously 12 months, which nonetheless grips many nations.

Malaysia’s first and severest Movement Control Order (MCO) of March to May 2020 noticed GDP contract within the second quarter by a staggering 17 per cent year-on-year. Unemployment ballooned from 3.3 per cent in February to five.3 per cent in May.

Relief measures, particularly wage subsidies and mortgage moratoriums, and money help for households and microenterprises, helped staunch the haemorrhaging. Malaysia subsequently eased restrictions and shifted into recovery mode, with unemployment moderating to 4.6 per cent in September.

A COVID-19 resurgence in late 2020 dampened that momentum. Unemployment inched as much as 4.8 per cent in November to December. Malaysia greeted 2021 grimly with a return to a different MCO – and extra rounds of stimulus.

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CAUTION AGAINST OVER-EXUBERANCE

However, the temper in Malaysia’s corridors of energy is distinctly sanguine. This leans on home and international growth, and has prompted forecasts of 6 per cent to 7.5 per cent GDP development for 2021. This is a sea change from the 5.6 per cent contraction suffered in 2020.

Labour market information helps a extra tempered outlook for staff. The newest labour drive information present unemployment nonetheless hovered at 4.8 per cent to 4.9 per cent in January-February; the federal government has cited a report projecting a gradual descent to 4.3 per cent.

In different phrases, employment will not absolutely get better to pre-COVID-19 ranges by year-end.

FILE PHOTO: A GrabFood rider gets ready for a delivery outside a McDonald?s restaurant, amid the co

A GrabFood rider will get prepared for a supply outdoors a McDonald’s restaurant in Kuala Lumpur on Jul 8, 2020. (File photograph: Reuters/Lim Huey Teng)

The Employment Insurance System’s (EIS) register of lack of employment (LOE) circumstances additionally cautions towards over-exuberance. This gives supplementary information factors on labour market well being, with a caveat that high-skilled staff are disproportionately extra prone to lodge LOE and declare EIS advantages.

Comparing LOEs per 30 days since January 2020, the unemployment state of affairs in early 2021 has stabilised but not but established a constructive trajectory.

All issues thought-about, and barring mishaps in vaccination or failures to comprise potential viral waves, the economic system and labour market look poised to get better, though the tempo is unsure and the downturn in tourism stays acute.

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MISMATCH BETWEEN SKILLS AND JOBS

Some previous complications and unresolved points are resurfacing with added urgency, and a few self-inflicted accidents would require treatment. Among many points, there are 4 challenges and accompanying alternatives.

First, the multitude of jobs misplaced and wages minimize demand immense replenishment, but this era of heightened give attention to development and well-being presents a window of alternative to additionally recalibrate the economic system towards producing good, well-paying jobs.

Such initiatives are inclined to get shelved in disaster, and the impetus diminishes when the economic system is buzzing alongside and employers wield the menace that change disrupts the nice instances.

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The drawback of staff holding jobs beneath their {qualifications}, termed skill-based under-employment, has worsened in recent times, and continued by 2020.

In mid-2019, 32 per cent of all tertiary-educated staff occupied jobs that do not require such {qualifications}. At the tip of 2020, the proportion reached 37 per cent.

The underlying issues are complicated, and derive from inadequacies of each expert staff and high-skilled jobs. Wage-boosting interventions, of which Malaysia has relied on minimal wage, have did not compel the labour market to generate increased productiveness jobs.

Malaysia's Top Glove is the world's biggest latex glove maker

A employee inspects disposable gloves on the Top Glove manufacturing unit manufacturing line in Shah Alam on the outskirts of Kuala Lumpur, Malaysia on Aug 26, 2020. (Photo: AFP/Mohd Rasfan)

Enhancing work circumstances, comparable to redefining the work week from 48 hours in the direction of the worldwide norm of 40, ought to be one of many reforms to be carried out.

The perennial dilemma – dependence on low-skilled migrant staff – is resounding once more. “Malaysianisation” initiatives in January to March induced solely 600 cases, nationwide, of native staff filling jobs previously held by overseas staff.

This dismal file displays the yawning gulf between job choices and employee expectations. At the identical time, hiring subsidies had been claimed for 37,000 workers.

Moving ahead, Malaysia ought to think about aligning job creation incentives with broader growth priorities and focused development sectors.

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TIDE OF RECOVERY SHOULD LIFT ALL BOATS

Second, the federal government’s regrettable choice to permit hundreds of thousands of staff to deplete their retirement financial savings can have severe ramifications. By finish February, three out of 10 energetic Employees’ Provident Fund (EPF) members had drained their retirement accounts to as little as RM100, whereas 60 per cent had tapped into financial savings meant for housing, well being and training.

Workers who did so have gained current reduction, but at a future value. The authorities should be clear and accountable by rigorously calculating the full retirement earnings misplaced and offering solutions to the households affected.

Third, whereas the wage subsidy protected jobs and has set a precedent for a coverage that may be activated ought to a dire disaster strike once more, the unemployed have unusually bypassed EIS, the establishment established exactly to help them by these travails.

6.3 million staff had been registered with EIS initially of 2020, simply in time to face a recession. However, because the variety of unemployed swelled by 168,300 in April 2020, solely 10,100 EIS account holders claimed unemployment advantages within the following month.

Workers’ obvious under-utilisation of the EIS, particularly among the many ones with out tertiary training, should be addressed.

A worker collects palm oil fruits at a plantation in Bahau, Negeri Sembilan

FILE PHOTO: A employee collects palm oil fruits at a plantation in Malaysia on Jan 30, 2019. (Photo: Reuters/Lai Seng Sin)

Fourth, among the most weak in society – the self-employed, casual economic system individuals and microenterprises – inhabit completely different economic areas, typically faraway from the mainstream and with out entry to social safety.

The authorities’s extension of money help to microenterprises displays their precarious situation, and signifies the necessity to consolidate insurance policies concentrating on these teams, not simply to outlive but to thrive.

Examined as an entire, Malaysia should steward an economic recovery that lifts the well-being of all households, particularly these on the backside.

Lee Hwok-Aun is Senior Fellow of the Regional Economic Studies Programme and Co-coordinator of the Malaysia Studies Programme at ISEAS – Yusof Ishak Institute. This article was first published by ISEAS – Yusof Ishak Institute as a commentary in Fulcrum.

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