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Labour market reforms necessary
Bank Negara Malaysia (BNM), in its Economic & Monetary Review (EMR) 2022 report, stated that labour market reforms must be speeded up to support economic growth as continued economic activity expansion is expected this year.
While the central bank stated that Malaysia’s labour market is still some way away from tightness or high labour utilization, a shortfall in demand for labour, relative to the supply of available workers in the economy is the expected scenario.
BNM stated that specifically there remains some degree of underutilization, given the high labour force participation, as well as a small number of workers who have remained outside the labour force due to Covid 19, that is a ‘potential’ labour force.
BNM stated there is a lot of room for improvement in salaries and wages, and therefore, the income of Malaysian workers needs to be carefully evaluated before exerting significant pressure on prices.
BNM stated more comprehensive and nuanced assessments on overall labour market conditions contributed towards supporting evidence based monetary policy decisions as monetary policy is basically a countercyclical tool.
It is heavily interdependent with structural policies which affect an economy’s ability to withstand shocks. A sustained recovery has a higher chance of being more enduring when it is further facilitated by complementary structural reforms.
-THE MALAYSIA VOICE