I honestly don’t know, but our new EPU head thinks its 4% (excerpt):
KUALA LUMPUR: The country's sustainable economic growth over the past 20 years has kept the unemployment rate at below 4 percent, which based on economic definition, is considered as full employment, Dewan Rakyat heard.
Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar said the good economic growth since 2011, from 5.1 percent to 5.6 per cent last year saw the creation of 438,800 jobs in 2012, compared to 385,000 previously.
"This means that the unemployment rate declined from 3.1 percent in 2011 to 3 percent in 2012," he said in reply to a written question by Mohamed Azmin Ali (PKR-Gombak)…
…However, opposition leader Datuk Seri Anwar Ibrahim (PKR-Permatang Pauh) felt otherwise and asked Abdul Wahid not to only read answers provided by his officers…
…Anwar claimed that the 3 percent unemployment statistic was unrealistic based on the assumption that there were about 80,000 unemployed graduates.
Assuming that it was a good rate was also inaccurate as those who were employed were in the under employment category.
Anwar’s question is valid – underemployment is something that isn’t tracked in the publicly available statistics, and is a potential qualifer to the unemployment rate. My own viewing of the employment statistics reveals a lot of statistical noise, which means that any month’s data is likely to have some error built in.
Nor can I verify the job creation claim. The monthly data from DOS indicates a net increase of 195k jobs for 2012 (737.4 for 2011). The figure given by Wahid may be gross job creation, but I don’t know.
There’s another potential fly in the ointment, such as how much of the labour force is actually active, i.e. the unemployment numbers specifically exclude those out of the labour force or are not looking for work. That’s why the unemployment rate should be read together with the labour force participation rate (LFPR), which indicates how much of the potential labour force is employed and looking for work, as a ratio to the total.
Here it’s pretty unambiguous:
To top (blue) line is the LFPR, the percentage of the total population of working age who are employed or who are looking for work. The bottom (red) line measures just employment as a ratio to the working age population. In both cases, the trend has been rising since 2010.
Whether or not you believe the official 3% rate, job creation and the number of people in work or looking for work has been rising the last couple of years. A bigger portion of the population has entered the labour force, and are actually finding jobs. Underemployment exists, but this is true anywhere and everywhere; it’s more a question of how much.
These and more questions really speak towards getting better statistics on the actual situation in the labour market, something Malaysia has been noticeably weak on over the years. With income and employment issues gaining interest, we really need an upgrade in terms of available data.