By Sharifah Pirdaus Syed Ali
KUALA LUMPUR, Nov 12 (Bernama) – As the global economy is expected to slowdown in 2023, continuous labour market recovery initiatives are extremely important for Malaysia to tackle the rising cost of living, said an economist.
The United Arab Emirates' Human Resources and Emiratisation ministry's chief labour economist cum advisor to the Minister, associate professor Dr Mohd Yusof said Malaysia’s economic growth will not be spared and is expected to moderate to between 4 and 5 per cent in 2023 from the estimated 6.5 to 7 per cent this year.
Referring to Budget 2023 in which special emphasis were given to tackle the cost of living, Dr Mohd Yusof, in an interview with Bernama, noted that two-thirds of household income were derived from the labour market in the form of paid salaries but the recent rising cost of living had also “suppressed” household disposable income.
“Thus, improving the labour market conditions by creating jobs and increasing wages would reduce cost of living pressure, thereby, lightening the burden of households,” he said.
He said the Consumer Price Index (CPI) for food and non-alcoholic beverages had increased steeply by over four per cent since March 2022.
Although unemployment was 3.7 per cent in July 2022 versus 4.2 per cent in January 2022 -- the lowest since February 2020 -- the rate was still higher than the 3.3 per cent in pre-pandemic 2019, he said.
“Thus, the increase in food and beverage prices will definitely have an impact on household income especially for the bottom 40 per cent (B40) and lower middle 40 per cent (M40) income groups,” he said.
He also highlighted that Budget 2022 initiatives did not anticipate the accelerated cost of living due to the Ukraine-Russia conflict, global supply chain disruptions due to China's zero COVID-19 policy, global inflation as well as US Federal Reserve tightening monetary policy.
“Cushioning the impact of these uncertainties had resulted in an increase in the total amount of subsidies by the Malaysian Government from RM31 billion to RM77.3 billion this year,” he said.
He said the government had allocated at least RM99.7 billion in Budget 2023 to cover end-to-end labour market ecosystem which encompasses labour supply and demand to further improve labour market conditions.
In relation to the end-to-end labour market ecosystem, Budget 2023 addressed a few key measures which are crucial to improve labour supply outcomes, he said.
Among them were the multi-dimensional approaches to incentivise people to work and realign workforce skills and proficiencies to meet industry demand to support economic production.
“Youth unemployment, graduate employability, worker protection and talent development were also addressed in Budget 2023 leveraging on high technology and digital-based growth to further reinforce improving the workforce and living standards,” he said.
According to Mohd Yusof, the direction to reform the economy was much clearer in Budget 2023, given the significant budget allocation to spur high quality investment in the strategic sectors, creat high-skilled jobs and incentivise digitisation and automation.
“Micro, small and medium enterprises (MSMEs) were also encouraged to move up the value chain to innovate and produce high quality products and services. These measures are important to create real jobs for Malaysians,” he said.
He noted that many economic sectors had suffered from labour shortages due to the COVID-19 pandemic. Hence, inclusive government intervention had to be implemented to maximise local talents to fill up vacancies.
“For example, hiring incentives under Social Security Organisation (SOCSO) encouraged employers to provide job opportunities for disable person, the orang asli community, ex-convicts and women in order to help close the inequality gap.
“Besides that, improving job matching mechanism was also important to reduce job search friction,” he said.
He said the setting up of public employment service provider MYFutureJobs satellite centres across the country and the National Placement Centre initiative in the Budget 2023 were also imperative to assist job seekers to find relevant work.
In a nutshell, he said it is important for Malaysia to ensure that Budget 2023 be passed so that the initiatives outlined for the economic recovery can be implemented.
The development expenditure allocated in the budget also covered vital aspects for labour market empowerment strategies aligned to the 12th Malaysia Plan, he said.
An example is the RM235 million allocation to encourage women to increase their business capacity and improve marketing strategies under the Semarak-Nita BSN Scheme, Tekunita TEKUN, DanaNita MARA and Biz Lady Bank Rakyat.
“These initiatives are expected to increase women labour participation to directly support the policy direction of developing future talent,” he said.