Malaysia Unemployment Rate Drops


Okun’s law has stated very simply that when unemployment falls by 1%, gross national product (GNP) rises by 3%. Another version of Okun’s law focuses on a relationship between unemployment and GDP, whereby a percentage increase in unemployment causes a 2% fall in GDP.

The unemployment rate is a key measure of labour underutilization, as it provides an indication of the most evidently and straightforwardly unused labour supply: jobless persons who are available and looking for a job.

This is valuable information, but it does not cover all the ways in which the current labour supply may be underutilized.

The unemployment rate is the percent of the labour force that is jobless. It is a lagging indicator, meaning that it generally rises or falls in the wake of changing economic conditions, rather than anticipating them.

When the economy is in poor shape and jobs are scarce, the unemployment rate can be expected to rise.

When the economy is growing at a healthy rate and jobs are relatively plentiful, it can be expected to fall.

The   unemployment  rate   is  calculated  by  expressing  the  number  of  unemployed  persons as  a percentage of the total number of persons in the labour force.

The labour force  is  the  sum  of  the  number  of  persons  employed  and  the  number  of persons  unemployed. Thus,  the  measurement  of  the  unemployment  rate  requires  the  measurement  of both employment and unemployment.

Unemployed persons are defined as those who report that they are without work, that they are available for work and that they have taken active steps to find work in the last four weeks.

The ILO Guidelines specify what actions count as active steps to find work; these include answering vacancy notices, visiting factories, construction sites and other places of work, and placing advertisements in the press as well as registering with labour offices.

The opening of more economic activities since 10 June 2020 initiated more positive impact with an increase in the number of labour force by 49, 500 persons to record 15.76 million persons as compared to May 2020.

Employed persons grew marginally by 0.7 per cent month-on-month (May 2020: -0.3%) to 14.99 million persons.

The number of outside labour force increased marginally by 0.1 per cent as against May 2020, bringing the total number to 7.40 million persons.

The unemployment rate in Malaysia fell to 4.9 percent in June 2020 from a record high of 5.3 percent a month earlier, as the country gradually lifted strict coronavirus lockdown restrictions. The number of unemployed dropped to 773, 200. Meanwhile, the labour force went up to 15.76 million.

Comments are closed.