New variants of Covid-19 could dampen labor market prospects

Analysts remain cautious about the outlook for the labor market in Malaysia as uncertainties surrounding new variants of the Covid-19 virus and the business outlook could dampen employment prospects. – Photo by Bernama

KUCHING: Uncertainties surrounding new variants of the Covid-19 virus and business outlook could dampen employment prospects, analysts say.

AmBank Research found that the unemployment rate peaked after improving from the 4.8% level for two consecutive months in June and July.

“This is perhaps due to the easing of restrictions and the gradual reopening of the economy coupled with the high vaccination rate which has allowed more sectors to function,” the research firm said yesterday.

AmBank Research expects Malaysia’s annual unemployment rate to stand at 4.4%, from 4.8% previously, as the economy reopens and the labor market continues to recover, although only at a moderate pace.

Now that 90% of the adult population is vaccinated, the research firm also expects the economy to enter the endemic phase of Covid-19 by the end of October.

“This will allow the reopening of a greater number of sectors with the implementation of new Covid-19 standards, strengthening the prospects for growth and the labor market.

“Nonetheless, we must remain cautious. Uncertainties surrounding new variants of the Covid-19 virus and business prospects could dampen job prospects.

“You have to look at the underemployed segment and those in the informal sector. “

AmBank Research added that it will take a few years, probably around 2023, for the country to reach an unemployment rate of around 3.3% before the pandemic.

The research arm of Kenanga Investment Bank Bhd (Kenanga Research) also noted that downside risks remain associated with the continued surge in Covid-19 infections caused by the emergence of the new variant, which could threaten the pace of economic recovery.

That said, Kenanga Research expects the labor market to gradually recover towards the end of the year, in line with the expected resumption of most economic activities as the country moves into the endemic phase in the middle of the crisis. progression of the vaccination rate against Covid-19.

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