The first two months of Q2 2020 saw significant changes to Malaysia's labour market as most economic activities came to a halt in April, and businesses slowly opened in May and June, with strict standard operating procedures in place. Overall, this period resulted in total employment falling to 14.88mn persons while unemployment rate increased to 5.1 per cent in Q2 2020.

This is per the newly released Labour Market Review, Second Quarter 2020 by Department of Statistics, Malaysia (DOSM).

In terms of the demand and supply of jobs, the Services sector saw a reduction of employed persons - specifically in the sub-sectors of accommodation, food & beverages, and arts, entertainment & recreation. Meanwhile, certain sectors experienced an increase in employed persons, namely within e-commerce activity, delivery services, and information & communication technology related activities.

These are some of the other key findings from the Q2 analysis:

  • Labour supply in Malaysia saw significant year-on-year change in Q2 2020 as COVID-19 took its toll on the labour market in April and May 2020. In Q2 2020, the number of employed persons declined 1.3% year-on-year to 14.88mn persons. Employment-to-population ratio which indicates the ability of an economy to create employment dropped 1.9 percentage points from the same quarter of the preceding year to 64.6%.
  • employment dosm q2 2020
  • Overall, total jobs in the private sector decreased year-on-year by 236,000 to 8.38mn. Vacancies in the private sector decreased by 48,000 to 170,000 jobs. Despite softer labour demand in this quarter, there were still 12,000 jobs created which were mostly semi-skilled.
  • In Q2 2020, labour productivity per employment decreased by 16% to RM19,455 per person as employment declined 1.3%. On the contrary, labour productivity by value added per hour worked increased 15.6% with a level of RM46 per hour. This was due to the total number of hours worked having declined 28.2% during the quarter.
  • As businesses and movement were restricted, business revenue lowered and subsequently put pressure on the labour market. However, with the Government initiatives including the PRIHATIN, PRIHATIN Plus and Short Term Economic Recovery Plan (PENJANA), many businesses were able to retain their employees. Towards the end of the quarter, more economic sectors reopened, and thus the labour market saw signs of recovery.
  • As physical distancing is becoming a new norm, industries started to shift towards digitalisation to sustain productivity. This development is hoped to also spur the Industrial Revolution 4.0, where automation becomes a larger part of the economy, and creates more skilled jobs to absorb the growing supply of graduates.

DOSM has also released the Labour Productivity of Second Quarter 2020 report, which found that in Q2 2020, Malaysia’s labour productivity (as measured by value added per hour worked) increased 15.6%. The double digit growth in labour productivity by value added per hour worked in this quarter was due to larger decline in hours worked as compared to sluggish performance in gross value added.

During this quarter, Malaysia’s GDP contracted 17.1% (Q1 2020: 0.7%), while hours worked decreased further to 28.2% (Q1 2020: -1.4%). Labour productivity (in terms of value added per employment) dropped 16% in this quarter from negative 0.8% in Q1 2020, while employment declined 1.3%.

value added hours dosm q2 2020

The following is a sectoral breakdown of labour productivity in Malaysia for Q2 2020:

  1. Labour productivity by hours worked for Agriculture sector went up to 16.1% in Q2 2020 as compared to a negative 7.1% in Q1 2020. The growth of value added during this quarter was 1% (Q1 2020: -8.7%) while hours worked decreased 13% (Q1 2020: -1.8%).
  2. Mining and Quarrying sector recorded a growth of 6.9% (Q1 2020: 3.8%) of labour productivity by hours worked. The value added for this sector declined further to negative 20% (Q1 2020: -2.0%) while hours worked dropped at a faster rate of negative 25.1% (Q1 2020: -5.6%).
  3. The growth of labour productivity, value added per hour worked for Manufacturing sector stepped up 15.2% (Q1 2020: 2.2%). The value added of this sector plunged 18.3% after registering 1.5% in the preceding quarter while hours worked dropped 29.1% (Q1 2020: -0.7%).
    • The highest growth of labour productivity by hours worked in Manufacturing sector was recorded by vegetable and animal oils & fats and food processing (36.1%). This was followed by transport equipment, other manufacturing & repair, and electrical, electronic & optical products which posted a growth of 35.7% and 35.2% respectively.
  4. Labour productivity by hours worked for Construction sector declined 3.2% in Q2 2020 (Q1 2020: -1.6%). The growth of value added in this sector plummeted 44.5% (Q1 2020: -7.9%) while hours worked decreased further to 42.7% (Q1 2020: -6.4%).
  5. Services sector posted a growth of labour productivity in terms of value added per hour worked at 17.2% (Q1 2020: 3.7%). Value added of this sector shrank 16.2% (Q1 2020: 3.1%) while hours worked dropped 28.5% (Q1 2020: -0.6%).
    • During this quarter, the highest growth of labour productivity by hours worked in Services sector was recorded by information & communication (51.5%). This was followed by utilities (22.2%), and finance & insurance (21.8%). 

All images and graphics / DOSM

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