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Showing posts with label Unemployment. Show all posts
Showing posts with label Unemployment. Show all posts

Monday, September 6, 2021

‘Silent crisis’ looms as US to end Covid-19 aid for millions of jobless


Tough times: A sign advertising job openings is seen in New York. The US economy is far from healed, with 5.3 million jobs lost to the pandemic yet to be restored and employers adding a mere 235,000 positions in August - Last year, the United States massively expanded unemployment aid as Covid-19 broke out.— Reuters pic


WASHINGTON, Sept 6 — Spending less on food. Drawing down on retirement savings. Dropping out of the workforce altogether.

Last year, the United States massively expanded unemployment aid as Covid-19 broke out. But in the coming days those benefits will end, forcing millions of jobless Americans — some of whom haven’t worked for the entire pandemic — to make hard choices about how they will get by in an economy newly menaced by the Delta variant.

“I have no idea how we would survive, just on my daughter’s income,” said Deborah Lee, an unemployed phlebotomist in Arizona who is recovering from a Covid outbreak that affected her daughter and two of her three granddaughters.

The government-funded programmes that increased weekly payments and gave aid to the long-term unemployed and freelancers were credited with keeping the United States from an even worse economic collapse last year.

In recent months they have become controversial, with some states ending them early and arguing they encouraged people not to return to jobs that Covid-19 vaccines made safe, though studies have disputed that contention.

From September 6 they will end nationwide, and while economists don’t expect them to meaningfully dent the US economy’s recovery from its 2020 debacle, they’ll undoubtedly up the pressure on the unemployed.

“I think it’s going to be an underappreciated event in the economy,” said Andrew Stettner of progressive think tank The Century Foundation, predicting that 7.5 million people will be relying on the programmes when they end.

“It’ll be kind of a silent crisis.”

‘Screwed over’

The expansion of the unemployment safety net occurred in March 2020, when Congress rushed to blunt the emerging pandemic with US$2.2 trillion (RM9.11 trillion) in spending through the CARES Act rescue package.

While never meant to be permanent, the benefits were reauthorised twice, most recently in the US$1.9 trillion American Rescue Plan enacted by President Joe Biden and his Democratic allies in Congress last March.

While many in the Republican Party at first backed the programmes, by this year their lawmakers were arguing against them, and 26 states, most with Republican governors, moved to end them early in whole or in part.

A study published last month by researchers from American and Canadian universities found only modest improvements in hiring and earnings in some of those states that ended the aid early, while spending fell 20 per cent.

Meanwhile the economy is far from healed, with 5.3 million jobs lost to the pandemic yet to be restored and employers adding a mere 235,000 positions in August, according to government data released Friday.

In Delaware, Ohio, Karen Coldwell says she sends out about 10 job applications weekly but has yet to be hired. All other openings she sees are for low-wage work, the kind of jobs she held when she was younger.

At age 64 she is not yet ready to retire, but worries she’ll have to start dipping into her retirement savings once the long-term unemployment programme ends.

“There’s just nothing out there. There’s jobs, but the money’s not there anymore,” Coldwell said. Others can’t return to the workforce, even though they know the benefits that make up their only income are ending. Brooke Ganieany of The Dalles, Oregon, said she has no one to care for her toddler son if she were to find employment.

“I feel kind of screwed over,” the 21-year-old told AFP. “I feel like they’re doing this to make us have a plan and get back to reality, which is not exactly the slogan they should be using.”

Unequal damage

Those eligible will continue to receive benefits under states’ regular unemployment programmes — but the end of a US$300 extra weekly supplement means their checks are about to shrink.

“It’s going to affect it so much. I’m going to have to cut back on food,” said 58-year-old Karen Williams, an unemployed graphic designer in Pennsylvania.

Gregory Daco of Oxford Economics predicted the cut off in benefits would lower household income by US$4.2 billion per week in September, or about US$210 billion annualised for the month.

“It’s not going to be the type of shock that puts the US economy into reverse,” he said in an interview, but predicted that “lower-income families and minorities are more likely to be negatively impacted.”

Fearful of further coronavirus variants and with her daughter missing badly needed pay from the family’s battle with Covid-19, Lee said she is waiting to hear whether the government will grant her disability aid for a hand injury, conceding her days of employment are likely behind her, at least for now.

“I don’t even know what the answer is,” she said. — AFP

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Monday, May 13, 2019

South Korea's latest big export: Jobless college graduates


South Korea's latest big export: Jobless college graduates - Reuters

Left: A jobseeker stands as he gets into the 2018 Japan Job Fair in Seoul, South Korea. Jobseekers attend the 2018 Japan Job Fair in Seoul, South Korea. (Filepics)


SEOUL: Cho Min-kyong boasts an engineering degree from one of South Korea's top universities, a school design award and a near-perfect score in her English proficiency test.

But she had all but given up hope of finding a job when all her 10 applications, including one to Hyundai Motor Co, were rejected in 2016.

Help came unexpectedly from neighboring Japan six months later: Cho got job offers from Nissan Motor Co and two other Japanese companies after a job fair hosted by the South Korean government to match the country's skilled labor with overseas employers.

"It's not that I wasn't good enough. There are just too many job seekers like me, that's why everyone just fails," said the 27-year-old, who now works in Atsugi, an hour southwest of Tokyo, as a car seat engineer for Nissan.

"There are numerous more opportunities outside Korea."

Facing an unprecedented job crunch at home, many young South Koreans are now signing up for government-sponsored programs designed to find overseas positions for a growing number of jobless college graduates in Asia's fourth largest economy.

State-run programs such as K-move, rolled out to connect young Koreans to "quality jobs" in 70 countries, found overseas jobs for 5,783 graduates last year, more than triple the number in 2013, its first year.

Reuters Graphic
(Graphic: Korea's young talents going abroad png - https://tmsnrt.rs/2LwlSUU)

Almost one-third went to Japan, which is undergoing a historic labor shortage with unemployment at a 26-year low, while a quarter went to the United States, where the jobless rate dropped to the lowest in nearly half a century in April.

There are no strings attached. Unlike similar programs in places such as Singapore that come with an obligation to return and work for the government for up to six years, attendees of South Korea's programs are neither required to return, nor work for the state in the future.

"Brain drain isn't the government's immediate worry. Rather, it's more urgent to prevent them from sliding into poverty" even if it means pushing them abroad, said Kim Chul-ju, deputy dean at the Asian Development Bank Institute.

In 2018, South Korea generated the smallest number of jobs since the global financial crisis, only 97,000.

Nearly one in five young Koreans was out of work as of 2013, higher than the average 16 percent among the member countries of the Organization for Economic Cooperation and Development.

In March, one in every four Koreans in the 15-29 age group was not employed either by choice or due to the lack of jobs, according to government data.

Reuters Graphic
(Graphic: S.Koreans landing overseas jobs by country 2018 png - https://tmsnrt.rs/2DZCTR9)

LABOR MISMATCH

While India and other countries face similar challenges in creating jobs for skilled labor, the dominance of family-run conglomerates known as chaebol makes South Korea uniquely vulnerable.

The top 10 conglomerates including world-class brands such as Samsung and Hyundai, make up half of South Korea's total market capitalization.

But only 13 percent of the country's workforce is employed by firms with more than 250 employees, the second lowest after Greece in the OECD, and far below the 47 percent in Japan. "The big companies have mastered a business model to survive without boosting hiring," as labor costs rise and firing legacy workers remains difficult, said Kim So-young, an economics professor at Seoul National University.

Yet while increasing numbers of college graduates are moving overseas for work, South Korea is bringing in more foreigners to solve another labor problem – an acute shortage of blue collar workers.

South Korea has the most highly educated youth in the OECD, with three-quarters of high school students going to college, compared with the average of 44.5 percent.

"South Korea is paying the price for its overprotection of top-tier jobs and education fervor that produced a flood of people wanting only that small number of top jobs," said Ban Ga-woon, a labor market researcher at state-run Korea Research Institute for Vocational Education & Training.

Even amid a glut of over-educated and under-employed graduates, most refuse to "get their hands dirty", says Lim Chae-wook, who manages a factory making cable trays that employs 90 people in Ansan, southwest of Seoul. "Locals simply don’t want this job cause they think its degrading, so we're forced to hire a lot of foreign workers," Lim said, pointing to nearly two dozens workers from the Philippines, Vietnam and China working in safety masks behind welding machines.

In the southwestern city of Gwangju, Kim Yong-gu, the chief executive of Kia Motor supplier Hyundai Hitech, says foreign workers are more expensive but he has no choice as he can't find enough locals to fill vacancies.

"We pay for accommodation, meals and other utility costs in order not to lose them to another factory," said Kim. Out of a staff of 70, 13 are Indonesian nationals, who sleep and eat at a building next to his factory.

NO HAPPY ENDING FOR EVERYONE

For those who escaped Korea's tough job market, not all has been rosy.


Several people who found overseas jobs with government help say they ended up taking menial work, such as dishwashing in Taiwan and meat processing in rural Australia, or were misinformed about pay and conditions.

Lee Sun-hyung, a 30-year old athletics major, used K-move to go to Sydney to work as a swim coach in 2017 but earned less than $A600 ($419) a month, one-third what her government handlers told her in Seoul.

"It wasn't what I had hoped for. I could not even afford to pay rent," said Lee, who ended up cleaning windows at a fashion store part-time before she returned home broke less than a year later.

Officials say they are making a "black list" of employers and improving the vetting process to prevent recurrence of such cases. The labor ministry also established a "support and reporting center" to better respond to problems.

Many on the programs lose touch once they go overseas. Almost 90 percent of the graduates who went abroad with the government's help between 2013-2016 didn't respond to the labor ministry's requests about their whereabouts or changed their contact details, a 2017 survey showed.

Still, the grim job market at home is driving more Koreans to the program every year. The government has also increased relevant budget to support rising demand - from 57.4 billion won ($48.9 million) in 2015 to 76.8 billion won in 2018, data released by lawmaker Kim Jung-hoon shows.

"The government isn't scaling up this project to the extent we would worry about brain drain," said Huh Chang, head of the development finance bureau at South Korea's finance ministry, which co-manages state-run vocational training programs with the labor ministry. Rather, the focus was on meeting growing demand for overseas experience given so many graduates are outside the workforce, Huh added.

A hopeful scenario would be for the economy to one day make use of the resources these graduates bring home as experienced returnees, Huh said.

For 28-year-old K-move alumni Lee Jae-young, that feels like a distant prospect.

"The one year abroad added a line in my resume, but that was about it," said Lee, who returned to Korea in February after working as a cook at the JW Marriott hotel in Texas. "I'm back home and still looking for a job." - Reuters

Source link   

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South Korea's latest big export: Jobless college graduates


South Korea's latest big export: Jobless college graduates - Reuters

Left: A jobseeker stands as he gets into the 2018 Japan Job Fair in Seoul, South Korea. Jobseekers attend the 2018 Japan Job Fair in Seoul, South Korea. (Filepics)


SEOUL: Cho Min-kyong boasts an engineering degree from one of South Korea's top universities, a school design award and a near-perfect score in her English proficiency test.

But she had all but given up hope of finding a job when all her 10 applications, including one to Hyundai Motor Co, were rejected in 2016.

Help came unexpectedly from neighboring Japan six months later: Cho got job offers from Nissan Motor Co and two other Japanese companies after a job fair hosted by the South Korean government to match the country's skilled labor with overseas employers.

"It's not that I wasn't good enough. There are just too many job seekers like me, that's why everyone just fails," said the 27-year-old, who now works in Atsugi, an hour southwest of Tokyo, as a car seat engineer for Nissan.

"There are numerous more opportunities outside Korea."

Facing an unprecedented job crunch at home, many young South Koreans are now signing up for government-sponsored programs designed to find overseas positions for a growing number of jobless college graduates in Asia's fourth largest economy.

State-run programs such as K-move, rolled out to connect young Koreans to "quality jobs" in 70 countries, found overseas jobs for 5,783 graduates last year, more than triple the number in 2013, its first year.

Reuters Graphic
(Graphic: Korea's young talents going abroad png - https://tmsnrt.rs/2LwlSUU)

Almost one-third went to Japan, which is undergoing a historic labor shortage with unemployment at a 26-year low, while a quarter went to the United States, where the jobless rate dropped to the lowest in nearly half a century in April.

There are no strings attached. Unlike similar programs in places such as Singapore that come with an obligation to return and work for the government for up to six years, attendees of South Korea's programs are neither required to return, nor work for the state in the future.

"Brain drain isn't the government's immediate worry. Rather, it's more urgent to prevent them from sliding into poverty" even if it means pushing them abroad, said Kim Chul-ju, deputy dean at the Asian Development Bank Institute.

In 2018, South Korea generated the smallest number of jobs since the global financial crisis, only 97,000.

Nearly one in five young Koreans was out of work as of 2013, higher than the average 16 percent among the member countries of the Organization for Economic Cooperation and Development.

In March, one in every four Koreans in the 15-29 age group was not employed either by choice or due to the lack of jobs, according to government data.

Reuters Graphic
(Graphic: S.Koreans landing overseas jobs by country 2018 png - https://tmsnrt.rs/2DZCTR9)

LABOR MISMATCH

While India and other countries face similar challenges in creating jobs for skilled labor, the dominance of family-run conglomerates known as chaebol makes South Korea uniquely vulnerable.

The top 10 conglomerates including world-class brands such as Samsung and Hyundai, make up half of South Korea's total market capitalization.

But only 13 percent of the country's workforce is employed by firms with more than 250 employees, the second lowest after Greece in the OECD, and far below the 47 percent in Japan. "The big companies have mastered a business model to survive without boosting hiring," as labor costs rise and firing legacy workers remains difficult, said Kim So-young, an economics professor at Seoul National University.

Yet while increasing numbers of college graduates are moving overseas for work, South Korea is bringing in more foreigners to solve another labor problem – an acute shortage of blue collar workers.

South Korea has the most highly educated youth in the OECD, with three-quarters of high school students going to college, compared with the average of 44.5 percent.

"South Korea is paying the price for its overprotection of top-tier jobs and education fervor that produced a flood of people wanting only that small number of top jobs," said Ban Ga-woon, a labor market researcher at state-run Korea Research Institute for Vocational Education & Training.

Even amid a glut of over-educated and under-employed graduates, most refuse to "get their hands dirty", says Lim Chae-wook, who manages a factory making cable trays that employs 90 people in Ansan, southwest of Seoul. "Locals simply don’t want this job cause they think its degrading, so we're forced to hire a lot of foreign workers," Lim said, pointing to nearly two dozens workers from the Philippines, Vietnam and China working in safety masks behind welding machines.

In the southwestern city of Gwangju, Kim Yong-gu, the chief executive of Kia Motor supplier Hyundai Hitech, says foreign workers are more expensive but he has no choice as he can't find enough locals to fill vacancies.

"We pay for accommodation, meals and other utility costs in order not to lose them to another factory," said Kim. Out of a staff of 70, 13 are Indonesian nationals, who sleep and eat at a building next to his factory.

NO HAPPY ENDING FOR EVERYONE

For those who escaped Korea's tough job market, not all has been rosy.


Several people who found overseas jobs with government help say they ended up taking menial work, such as dishwashing in Taiwan and meat processing in rural Australia, or were misinformed about pay and conditions.

Lee Sun-hyung, a 30-year old athletics major, used K-move to go to Sydney to work as a swim coach in 2017 but earned less than $A600 ($419) a month, one-third what her government handlers told her in Seoul.

"It wasn't what I had hoped for. I could not even afford to pay rent," said Lee, who ended up cleaning windows at a fashion store part-time before she returned home broke less than a year later.

Officials say they are making a "black list" of employers and improving the vetting process to prevent recurrence of such cases. The labor ministry also established a "support and reporting center" to better respond to problems.

Many on the programs lose touch once they go overseas. Almost 90 percent of the graduates who went abroad with the government's help between 2013-2016 didn't respond to the labor ministry's requests about their whereabouts or changed their contact details, a 2017 survey showed.

Still, the grim job market at home is driving more Koreans to the program every year. The government has also increased relevant budget to support rising demand - from 57.4 billion won ($48.9 million) in 2015 to 76.8 billion won in 2018, data released by lawmaker Kim Jung-hoon shows.

"The government isn't scaling up this project to the extent we would worry about brain drain," said Huh Chang, head of the development finance bureau at South Korea's finance ministry, which co-manages state-run vocational training programs with the labor ministry. Rather, the focus was on meeting growing demand for overseas experience given so many graduates are outside the workforce, Huh added.

A hopeful scenario would be for the economy to one day make use of the resources these graduates bring home as experienced returnees, Huh said.

For 28-year-old K-move alumni Lee Jae-young, that feels like a distant prospect.

"The one year abroad added a line in my resume, but that was about it," said Lee, who returned to Korea in February after working as a cook at the JW Marriott hotel in Texas. "I'm back home and still looking for a job." - Reuters

Source link   

Related posts:

5,000 Malaysians are illegals in South Korea, lured by higher pay, living underground !

 

 

In a tough market, young South Koreans vie for the security of government jobs

 


Risky business of overseas ‘jobs’ , Don’t get conned, Malaysians warned !


 Vanishing Jobs Growth Spells Deep Trouble for South Korea






Sunday, May 6, 2018

Youth unemployment hit record high in 2017: MIDF Research

Young and jobless | Invest Cyberjaya

Graduate unemployment was 45.5 of overall jobless amid skills mismatch and demand for low-skilled jobs, says MIDF Research

PETALING JAYA: Youth unemployment was at its highest ever at 10.8% in 2017, of which graduate unemployment constituted about 40.5% or 204,000 of total unemployment due to skills mismatch amid a backdrop where demand for low-skill jobs continues to reign – which in turn may leave the government falling short of its 35% skilled workforce target by 2020, according to MIDF Research.

For every 100 jobs available, there are 76 jobs for elementary occupations and 10 jobs for plant and machinery operators and assemblers, which leaves 14 jobs for the high-skill and other low-skill occupations.

About 86.3% of job vacancies in 2017 were for low-skill jobs which was deemed less suitable for a fresh graduate while high-skill jobs such as professional, technicians and associate professionals, comprised 4.1% of the total job vacancies.

It noted that the high single- and double-digit unemployment rate among youth, defined as those between 15 and 24 years old, as being normal not only in Malaysia, but in Europe, the US and South Korea.

The high youth unemployment rate was mainly contributed by soaring graduate unemployment, despite the steady increase in tertiary-educated workers joining the workforce, which was also the fastest growing segment at 4.1%, followed by secondary at 3.2% and no formal education by 0.3%.

Employment share of professionals and technicians and associate professionals improved to 12.2% and 10.5% in 2017 expanding at 0.8% and 4.6% respectively.

“In terms of share, the rising stake of skilled-worker or tertiary-educated is in line with the Eleventh Malaysia Plan. Under the plan, the government estimated skilled-worker to total workforce ratio to touch 35% by 2020. Nevertheless, we view the ratio is not expected to reach the target at the current pace,” MIDF Research said.

“We forecast the skilled-worker ratio to register at 32% by 2020. Continuous improvement in production efficiency, resource allocations and better technology adoptions under the Industry 4.0 will facilitate and accelerate the productivity level in Malaysia in the long run,” it added.

The overall unemployment rate in the country remained low at 3.4% last year.

Malacca remains as the state with the lowest youth unemployment rate for the seventh consecutive year at 2.9% while Sabah recorded the highest at 13.5% in 2017.

Meanwhile, Selangor the largest employer, 23.2% of total national employment saw overall unemployment rate of 2.8% and youth unemployment rate of 9.4% last year.

The overall youth unemployment rate across all states registered poor performances compared with the previous year, 2016.

In 2018, the youth unemployment rate is expected to fall slightly to 9.9% and the overall unemployment rate to stand at 3.3%.

The job market outlook for commodity-based sectors is expected to improve in tandem with recovering commodity prices. This in line with anticipation of improvement in global trade, and higher demand for export products is expected to benefit industries such as electrical & electronics and mining.- sunbiz@thesundaily.com


Related:

Youth unemployment rate still high | The Edge Markets


S. Korea's youth jobless rate hits record high, with those unemployed ...

 

Youth Unemployment Soars Despite Gov't Efforts - The Chosun Ilbo ...



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[PDF]Youth Unemployment Rate Remain High - MIDF

www.midf.com.my/images/.../Econs-Msia-2016-Youth-Unemployment-Rate-Remain-...
May 9, 2017 - Based on the latest developments in global and domestic economies, we anticipate youth unemployment rate to slightly fall to 10.1% while overall unemployment rate to stand at 3.3% in 2017. Youth unemployment rate hits 10.5% with number of unemployed youth reached 273,400 persons in 2016. Youth ...
 

Youths told not to be too dependent on govt for jobs - BorneoPost Online



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Youth unemployment hit record high in 2017: MIDF Research

Young and jobless | Invest Cyberjaya

Graduate unemployment was 45.5 of overall jobless amid skills mismatch and demand for low-skilled jobs, says MIDF Research

PETALING JAYA: Youth unemployment was at its highest ever at 10.8% in 2017, of which graduate unemployment constituted about 40.5% or 204,000 of total unemployment due to skills mismatch amid a backdrop where demand for low-skill jobs continues to reign – which in turn may leave the government falling short of its 35% skilled workforce target by 2020, according to MIDF Research.

For every 100 jobs available, there are 76 jobs for elementary occupations and 10 jobs for plant and machinery operators and assemblers, which leaves 14 jobs for the high-skill and other low-skill occupations.

About 86.3% of job vacancies in 2017 were for low-skill jobs which was deemed less suitable for a fresh graduate while high-skill jobs such as professional, technicians and associate professionals, comprised 4.1% of the total job vacancies.

It noted that the high single- and double-digit unemployment rate among youth, defined as those between 15 and 24 years old, as being normal not only in Malaysia, but in Europe, the US and South Korea.

The high youth unemployment rate was mainly contributed by soaring graduate unemployment, despite the steady increase in tertiary-educated workers joining the workforce, which was also the fastest growing segment at 4.1%, followed by secondary at 3.2% and no formal education by 0.3%.

Employment share of professionals and technicians and associate professionals improved to 12.2% and 10.5% in 2017 expanding at 0.8% and 4.6% respectively.

“In terms of share, the rising stake of skilled-worker or tertiary-educated is in line with the Eleventh Malaysia Plan. Under the plan, the government estimated skilled-worker to total workforce ratio to touch 35% by 2020. Nevertheless, we view the ratio is not expected to reach the target at the current pace,” MIDF Research said.

“We forecast the skilled-worker ratio to register at 32% by 2020. Continuous improvement in production efficiency, resource allocations and better technology adoptions under the Industry 4.0 will facilitate and accelerate the productivity level in Malaysia in the long run,” it added.

The overall unemployment rate in the country remained low at 3.4% last year.

Malacca remains as the state with the lowest youth unemployment rate for the seventh consecutive year at 2.9% while Sabah recorded the highest at 13.5% in 2017.

Meanwhile, Selangor the largest employer, 23.2% of total national employment saw overall unemployment rate of 2.8% and youth unemployment rate of 9.4% last year.

The overall youth unemployment rate across all states registered poor performances compared with the previous year, 2016.

In 2018, the youth unemployment rate is expected to fall slightly to 9.9% and the overall unemployment rate to stand at 3.3%.

The job market outlook for commodity-based sectors is expected to improve in tandem with recovering commodity prices. This in line with anticipation of improvement in global trade, and higher demand for export products is expected to benefit industries such as electrical & electronics and mining.- sunbiz@thesundaily.com


Related:

Youth unemployment rate still high | The Edge Markets


S. Korea's youth jobless rate hits record high, with those unemployed ...

 

Youth Unemployment Soars Despite Gov't Efforts - The Chosun Ilbo ...



https://youtu.be/JQYpJSPrbdk


Rising unemployment among university graduates worrying ...

 

[PDF]Youth Unemployment Rate Remain High - MIDF

www.midf.com.my/images/.../Econs-Msia-2016-Youth-Unemployment-Rate-Remain-...
May 9, 2017 - Based on the latest developments in global and domestic economies, we anticipate youth unemployment rate to slightly fall to 10.1% while overall unemployment rate to stand at 3.3% in 2017. Youth unemployment rate hits 10.5% with number of unemployed youth reached 273,400 persons in 2016. Youth ...
 

Youths told not to be too dependent on govt for jobs - BorneoPost Online



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Structural issues including education are holding Malaysia back

 

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Apr 6, 2016 ... So if both the US and Malaysian Governments couldn't stem the fat tide in their respective countries, who can? ... Putrajaya the obese-city!

Sunday, October 9, 2016

Malaysia's jobless rate on the rise as economic expansion slows


Unemployment in Malaysia is rising, the latest data released by the Statistics Department show.

The obvious correlation to the rise in the jobless rate, which in Malaysia is counted as those who are unemployed but remain actively looking for a job, is the slower pace of economic growth.

The economy, up until the second quarter ended June 30, has slowed for five quarters in a row with weak exports the main drag on growth.

Although private consumption and investments supported the economy in the second quarter, economists are not very confident that this will drive growth in the coming quarters without supportive government policies and improvement in overseas consumer demand.

This will have implications for jobs and the economy.

There could be reason for short-term cheer with data exceeding expectations, as August trade data released yesterday show but there are indications that downside risks remain.

Positive sentiments as reflected in the Malaysian Institute of Economic Research’s (Mier) business conditions index, which is now above the 100-point threshold, indicating that businesses’ confidence levels are up, can just as easily dissipate.

Consumers do not share the same sentiments as businesses, as the Mier’s consumer sentiments index show.

Although rising steadily since the beginning of the year, the index is still below the 100-point threshold, largely reflecting benign inflation and the fading impact of the goods and services tax implemented last year.

Standard Chartered plc Asean economic research head Edward Lee says private consumption growth momentum will not be sustainable because of the weak labour-market conditions.

Besides the higher unemployment rate, weak wage- and job-growth together with the slowdown in the property market and financial-market volatility to also affect spending sentiment.

Lee, who expects the economy to grow 3.8% this year compared to the official estimates of 4% to 4.5%, adds that the weakening labour market will be a drag on economic growth.

“Private consumption will be key to achieving this target, and we think it may come in weaker than the central bank expects due to weaker labour-market conditions.

“We will therefore monitor consumption metrics closely over the next few months,” he says.

Cautious consumer sentiment largely reflects the state of the job market and high household debt.

 
Different views: Consumers do not share the same sentiments as businesses, as Mier’s consumer sentiments index shows.

Data from Bank Negara and the Nikkei Malaysia manufacturing purchasing managers index (PMI) compiled by IHS Markit Ltd paint a bleaker picture.

While the September Nikkei Malaysia manufacturing PMI, which was released at the end of last month saw an improvement from August, it is still below the 50-point threshold, indicating that the manufacturing sector is still contracting.

But what is interesting is the press statement following the release of the August data, in which IHS Markit economist Amy Brownbill says the Malaysian manufacturing sector saw a sharper deterioration in operating conditions underpinned by quicker declines in output, new orders and employment with the rate of job shedding the fastest in over three years.

The August PMI report noted that firms cut back on payroll numbers as part of efforts to make cost savings.

Bank Negara report

A Bank Negara report also showed that labour market conditions have become challenging, with the recent high unemployment rates coinciding with lower job vacancies available per active job seekers.

AllianceDBS Research chief economist Manokaran Mottain said in a report released last week that while the manufacturing sector was shedding jobs, selected services subsectors has added headcount and could be cushioning job losses in the manufacturing sector.

More than half of the workforce are employed in the services sector with the manufacturing sector employing about 16%.

Further evidence of the deteriorating conditions in the job market comes from the Employees’ Provident Fund (EPF).

Manokaran says the monthly contribution value growth rate from the EPF’s members have moderated, signalling weak wage growth in recent years.

This also mirrors the slowdown in the economy over the past few quarters as businesses will not give higher increments or pay out bonuses.

Manokaran says based on trend-growth estimates, seasonally and inflation adjusted monthly EPF contribution growth has tapered to 2.7% in February on a year-on-year basis before the voluntary employees contribution rate reduction effective in March, down from around 10% growth in 2011.

He noted that while average household income grew 9.6% per annum between 2012 and 2014 in inflation adjusted terms based on the Statistics Department’s household income survey, this was largely propped up by government cash transfers (Bantuan Rakyat 1Malaysia payments) to the bottom 40% of earners.

“On average, given that 65% of household income is from paid employment, signs of wages growth moderation could weigh on household income growth going forward,” Manokaran says.

He adds that the state of labour market and income growth are among the key underlying factors in assessing the state of economic growth outlook.

Earlier this week, the World Bank slashed its growth forecast for Malaysia from 2016 to 2018 on the weak exports and commodity-price outlook. Its chief economist for the East Asia and Pacific Region, Sudhir Shetty, says despite the region’s favourable prospects, growth is vulnerable to a sharp global financial tightening, a further slowdown in world growth or a faster-than-anticipated slowdown in China.

By Fintan Ng The Star/ANN

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