MP SPEAKS | Responding to Covid-19 economy: Understanding employment shock

For each of these sectors, I estimate the number of "jobs at risk". These are jobs which may be lost but could potentially be reduced if well-design policies are put in place.

According to the Tourism Satellite Accounts for 2018, an estimated 3.4 million jobs are related to the tourism sector in services ranging from accommodation, F&B, passenger transport, travel agencies, recreational activities, retail sale of automotive fuel and retail trade. A conservative estimate of 30 percent of jobs at risk in this sector would translate into approximately 1 million jobs.

The manufacturing sector is an important engine for trade and economic activity and provides approximately 2.3 million jobs. Manufacturing held firm in the first quarter of the year, registering a 1.5 percent growth rate . But for the year's second quarter , figures for manufacturing will be in deep negative territory as even factories operating in essential sectors were mostly allowed to operate at a maximum of 50 percent capacity.

The agriculture sector provides an estimated 483,000 jobs to the economy. This sector contracted by 8.7 percent in Q1 2020 , led by palm oil production which contracted by 22 percent during this time period. The total labour force was 15.8 million as of March. With an estimated 2.3 million unemployed, we may reach a 14 percent unemployment rate at the height of this economic crisis.

One important indicator of the loss of employment is the reports to the Employment Insurance System made by individuals who were retrenched. The EIS centre has made available these retrenchment figures for 2019 and also for the months of January to April of this year. The unemployment rate in 2019 was 3.4 percent. If we project this to increase by 2.5 times, as a reflection of the projected LOE by the EIS centre, we would reach an unemployment rate of 8.4 percent in 2020, far higher than the estimated 4 percent by BNM and other government agencies.

Secondly, with local transmissions of Covid-19 having come down significantly, the government should focus its efforts on having specific plans to revive those sectors most affected by the Covid-19 crisis.

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