While unemployment figures are often cited by government agencies and business and other groups as a gauge of the country’s economic health, Shankaran Nambiar of the Malaysian Institute of Economic Research (MIER) warned that the extent of damage to the labour market by Covid-19 was underplayed with unemployment being the sole indicator.
“The extent of underemployment must be tremendous, and it goes unreported or underemphasised,” he told FMT.
“When an engineer is thrown out of a job and resorts to being a e-hailing driver, he remains employed, but he’s underemployed.
“Similarly, when the working day is shortened and salaries accordingly reduced, workers are underemployed,” he said.
The unemployment rate in August was 4.7%, which means 741,600 people out of a workforce of 15.9 million were jobless.
Lee Hwok Aun of Singapore’s ISEAS-Yusof Ishak Institute said there needed to be frequent reporting of data on underemployment, especially in light of Covid-19’s effect on the labour market.
According to the statistics department’s annual labour force surveys (LFS), which provide the most authoritative nationwide data on underemployment, only 2.2% of employed persons worked for 30 hours or less in 2019.
Thirty hours a week is considered the threshold for partial employment. Out of the 338,000 people working 30 hours or less, 70% said they were doing so because of insufficient work or the nature of the job.
While some workers may log long hours because they are undertaking a second job due to insufficient income from their primary job, Lee said he was not aware of a national estimation of the magnitude of the problem.
“We don’t know the current state of underemployment based on the LFS,” he said. “These statistics are reported on an annual basis, not monthly or quarterly.
“Even with unemployment recovering from 5.3% in May to 4.7% in July/August, these figures may paint a positive gloss on the labour market situation if it is not adequately capturing underemployment.
“It will be very pertinent and helpful for us to have some estimates of the effects of Covid-19 and MCO (movement control order)/CMCO (conditional MCO) on underemployment.”
Lee also said Malaysia should be taking a closer look at differentiating the underemployed from the fully employed or suitably employed. Suitably employed workers are those whose jobs are aligned with their qualifications.
“I think it is generally difficult for countries to get a handle on underemployment in times of crisis,” he said.
“Unemployment tends to take precedence, and for good reason.
“Addressing underemployment will require a targeted effort to investigate the extent of the problem, and one possible alternative to the current wage subsidies is a more targeted employment subsidy to top up wages of underemployed workers.”
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