Malaysia's labour market is forecast to remain stable this year, with the average unemployment rate at 3.2%, according to Kenanga Investment Bank, following the 2023 rate of 3.4%.

"This is largely attributed to the expected steady expansion in economic activities driven by strong domestic demand. We project gross domestic product growth to reach 3.3% in the first quarter of 2024 (4Q 2023: 3.0%) with an overall 2024 GDP growth forecast ranging from 4.5 to 5%.

"Additionally, we expect a recovery in the manufacturing sector, driven by technology upcycles, as well as the realisation of approved investments recorded last year, to further boost hiring activities in the coming months," the bank said in a note on Tuesday.

However, Kenanga Bank said that structural challenges remain in the labour market, with particular concern surrounding the sustained youth unemployment rate (ages 15-24), which held steady at 10.6% in February for the fourth consecutive month, impacting 306,600 individuals, The Star reports.

Furthermore, the bank highlighted that skill-related underemployment reached a record high of 37.4%, totalling 1.94 million individuals in the fourth quarter of last year.

However, Hong Leong Investment Bank Bhd (HLIB) has indicated that Malaysia's labour market is poised to receive ongoing benefits from a continued increase in tourism activities, along with its positive ripple effect on associated sectors such as wholesale and retail trade, food and beverage, and accommodation. 

Additionally, the implementation of national projects is expected to contribute positively to the labour market.

The bank said improvements to the global trade environment and implementation of future foreign direct investment projects could result in better employment conditions in export-oriented sectors.

HLIB went on to say that the National Human Resource Policy Framework, set to be implemented next month, is forecast to help reach the goal of a 35% skilled workforce by 2030.