Commentary: Resurgent pandemic sparks unemployment crisis among Malaysia’s most vulnerable workers
Youths, graduates and migrant workers are paying the price in Malaysia’s on-off movement control orders, says Stewart Nixon.
CANBERRA: More than a year from the first and strictest movement control order (MCO), Malaysians face the closest thing to deja vu under MCO 3.0.
The familiar constraints on operating hours and people movements are back. With daily infections peaking at more than 20 times the April 2020 maximum, the pace of factories shuttering and businesses closing can only increase.
Persistent disruptions, both domestically and globally, will continue to keep labour market conditions below pre-pandemic levels.
The overall unemployment rate has stabilised at around 4.8 per cent in the first quarter of 2021 up from a two-year low of 3.2 per cent in the fourth quarter of 2019, while both overall employed persons and total hours worked remain lower.
The number of people unemployed for more than three months has jumped over 63 per cent in five quarters, with 125,000 joining this category.
The labour force participation rate has dipped slightly overall, though non-citizens have disproportionately contributed to this.
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Within the overall bleak picture, a more acute crisis is worsening in known trouble spots. Groups whose employment situation was already vulnerable before economic conditions deteriorated have been hit the hardest.
These include young Malaysians seeking skill-appropriate employment, people with limited skills or education, Malaysians with mobility dependent occupations especially Johor residents, and foreign workers.
BRUTALLY EXPOSED: SKILLS MISMATCH AND GRADUATE EMPLOYMENT CHALLENGES
Malaysia has long struggled to match education outcomes with labour market skills requirements, particularly generating tertiary graduates and skilled jobs fitting their qualifications.
The pandemic has dramatically worsened prospects, with the hardship reported by graduates themselves mirrored in official data. Skill-related underemployment – those forced into jobs beneath their skillset – is up an astonishing 35.8 per cent since the fourth quarter of 2019.
While the number of tertiary-educated persons in employment has risen by almost 1.15 million over the approximate pandemic period, the number of skilled jobs has risen less than 500,000.
The glut of graduates may be depressing wages. Malaysian graduate labour force worryingly clocks higher unemployment rates than other educational levels. Among those with a job, two in 10 earn RM1,001 to RM1,500 (S$320 to S$1,600) a month, according to the Ministry of Higher Education 2020 survey.
It’s the young that face the brunt of this COVID-19 socioeconomic fallout, with fresh hires vulnerable to “last in, first out” layoff policies. Youth unemployment among 15 to 24-year-olds is over 12 per cent - more than five times the rate for middle-aged persons.
Making matters worse, many have little access to social protection with income support tied to prior employment and welfare schemes are grossly inadequate.
Recent government initiatives, like the Penjana KPT-CAP programme, providing further training and job placement are worthwhile, but most graduates simply cannot afford to wait months or years for suitable employment.
FLOW-THROUGH EFFECTS FOR LESSER SKILLED
As highly educated workers settle for mismatched jobs, they are eroding opportunities for the less educated and those approaching retirement age.
Employment among people with secondary education or lower has fallen faster than ordinary retirement and upskilling trends would account for.
Together with a sharp decline in low-skilled jobs and 55 to 64-year-olds experiencing the largest jump in unemployment, these suggest such groups are popular targets for layoffs.
Major employment declines are concentrated in crafts and trades, plant and machinery operation, skilled agriculture and elementary occupations, which confirms the vulnerability of less skilled workers.
MOBILE WORKERS FACE RELENTLESS DISRUPTION
Yet, it is jobs dependent on worker or consumer mobility that face the greatest difficulties under tight border restrictions.
Tourism and other non-essential travel pose too great a risk to public health until vaccination coverage expands significantly, with periods of relaxed interstate borders linked to pretty much every prior infection wave.
Contemporary statistics are unavailable but around a fifth to a quarter of Malaysians live outside of their state of birth, with the balik kampung holiday migration events showing vast numbers remain connected to their hometowns.
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Almost 200,000 breached travel bans and roadblocks to return during the Hari Raya holidays, Minister of Defence Ismail Sabri revealed. More have been separated from work or family by fluctuating internal borders, with the plight of this group largely overlooked by policymakers.
The predicament facing the approximately hundreds of thousands of Johor residents who commuted to Singapore for work pre-COVID-19 is well known but still unsatisfactorily resolved.
The Periodic Commuting Arrangement required stays of at least 90 days – separating workers from families – while quarantine arrangements of 14 to 21 days apply in both directions at prohibitive costs to most migrants.
While a new compassionate travel scheme allows for family members of the critically ill or deceased to enter either country, the majority of workers face either unemployment or extended family separation unless either virus containment allows for eased restrictions or both sides reach an agreement on vaccination certification and travel arrangement.
FOREIGN WORKERS EXPOSED BUT REMAIN ESSENTIAL TO BEATING COVID-19
As challenging as times are for vulnerable locals, foreign workers are the worst affected, when employers are expected to terminate foreigners before locals.
Total foreign worker permits shrank from 2 million to 1.4 million in 2020, levels last seen in 2004.
Non-citizens have borne the brunt of the labour market fallout, with their unemployment having risen 169 per cent since late 2019 alongside labour force participation falling from over 88 per cent to under 81 per cent.
By comparison, unemployment among citizens increased 40.6 per cent, with workforce participation has marginally improved. The states hit hardest by unemployment increases are mostly those with large immigrant populations - Sabah and Selangor.
Their employment and living conditions also put them at greater infection risk, as more become undocumented workers after losing their jobs.
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Even when employed, they are excluded from wage and living support under pandemic relief measures, and they have experienced huge difficulties including mandatory testing, targeting by officials, and increased social exclusion.
Most Malaysians have little sympathy for foreign workers, but they must be included in collective efforts to manage the pandemic. They make critical contributions to maintaining food supplies, the manufacturing of medical products, enforcing standard operating procedures in buildings and shopfronts and meeting increased demand for cleaning services.
Foreign workers – both documented and undocumented – are also so numerous that vaccinating them is a prerequisite to fully restoring labour market capacity and achieving herd immunity. Vaccination strategies involving immigration officials or law enforcement, rather than independent health professionals, will only discourage vaccination and endanger more jobs and public health.
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COMMON MARGINALISATION, PERSISTENT POLICY FAILURES
Malaysia’s vulnerable worker groups have been marginalised by outdated labour market and related policies unfit well before the pandemic and are now severely exposed by it.
These include inadequate safety nets for unemployed persons that discourage labour market mobility and increase settling for underemployment.
An education system not producing enough inquisitive minds, English language fluency and soft skills desired by employers in more advanced sectors has worsened the situation.
The continued influence of ethnicity and nationality in employment and government ownership in business creates unnecessary frictions, inefficiencies and discrimination that reduce job opportunities for all Malaysians.
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A foreign worker system providing few benefits to migrants or businesses encourages informality and eliminates regulation of migrant quality or quantity.
A system that offers a much better deal for a smaller number of migrants would eventually restore control of immigration management, with knock-on employment benefits for Malaysians across the skill spectrum.
With the expected recovery in 2021 threatened by a resurgent virus spread, Putrajaya cannot continue to ignore these persistent concerns.
Listen to Malaysians share how they have been coping fighting a new wave of COVID-19 infections in Heart of the Matter podcast:
Stewart Nixon is a research scholar at the Crawford School of Public Policy, The Australian National University and a recent research visitor at the University of Malaya.