Tuesday, May 24, 2011

March 2011 Employment Report

Well this month, I finally got something right on employment – the higher number of jobs created in the last couple of months has been sustained:


In total, the economy added about 200k jobs in March, which just about matches new entrants into the labour force. Since the trough in the recession, Malaysia has added about 1.5 million jobs, with about half of them in the last quarter of 2010:


The unemployment rate blipped up, mostly due to a higher labour force participation rate:


So here’s another piece of data for BNM to mull over as it decides on its next interest rate move – it’s beginning to look like the labour market’s getting tight. If that led to higher wages, then well and good. But higher wages would necessarily prompt more pressure for a monetary policy response.

Here’s a nasty thought: There’s been a shift in central bank policies globally towards tamping down demand led inflation ( compared to cost-push inflation) in the last 40 years, after the experience of the 1970s. Could that have been a factor in also keeping down wage growth during the same period? Would a bout of demand led inflation actually be good for (nominal and/or real) worker compensation?

That’s a counterintuitive, but strangely compelling argument. I need to think on this.

Technical Notes:

February 2011 Employment Report from the Department of Statistics (warning: pdf link)

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