The Vulnerability of Jobs to Mobility Restrictions: Malaysia's Experience during the COVID-19 Pandemic.

• Author: Rahman, Amanina Abdur

1. Introduction

   Malaysia has been adversely affected by the COVID-19 pandemic and the subsequent mobility restrictions implemented to flatten the curve of the pandemic. The health and human toll of the crisis on Malaysia has been severe, and many Malaysians have suffered from economic hardship and diminished prospects. Nevertheless, at least initially Malaysia performed better in mitigating the impact of the crisis than many other countries, because of the government's swift action in implementing mobility restrictions and other measures. Soon after the first case of the virus was reported in Malaysia in January 2020, the government enacted contact tracing, quarantine requirements for returning travellers and a travel ban for those coming from China. With increases in the number of identified cases by mid-March 2020, the government enacted the Movement Control Order (MCO) on 18 March 2020. During the MCO, businesses could not operate unless specifically authorised to do so. Subsequently, Malaysia imposed several variations of the MCO, which were initially only relaxed for persons who had received two doses of the COVID-19 vaccine in August 2021. Since then, the various mobility restrictions have been gradually removed and Malaysia's economy has begun to recover.

   Using the mobility restrictions implemented by Malaysia during the height of the COVID-19 pandemic in 2020 and 2021 as a case study, this paper relies on detailed data on employment patterns in Malaysia from the Department of Statistics Malaysia (DOSM) and data on the possibility to work from home and without physical proximity from America's Occupational Information Network (O*NET) database to estimate the extent and distribution of jobs most vulnerable to mobility restrictions. To do this, the paper employs two indicators that measure the ability to work from home and the degree of physical proximity involved in a job, respectively. The ability to work from home provides an indication of vulnerability to job loss with mobility restrictions in place. In comparison, the degree of physical proximity is an indicator of the likelihood that a worker can return to work given the risk of disease transmission between persons, even without mobility restrictions. To analyse the distribution of jobs most vulnerable to mobility restrictions, the paper considers the relationship between the two indicators and a number of socio-economic variables including income, education, gender, urban-rural location and employment status. (1)

   The paper finds that more than half of Malaysians have jobs that are either not conducive to homebased work or involve high levels of physical proximity and are therefore most vulnerable during mobility restrictions. Vulnerability is highest among those more economically at risk, including those with lower levels of education and the self-employed. Taking a forward-looking perspective, the paper also explores the relationship between skills that have been increasingly in demand in the advent of the Fourth Industrial Revolution with the ability to work from home (see World Bank 2018). It documents a positive relationship between occupations that allow work from home and those that require non-routine analytical skills, non-routine interpersonal skills and routine cognitive skills.

   The paper provides vital lessons in supporting those most vulnerable to job losses during any future mobility restrictions, either due to a resurgence of the COVID-19 pandemic or for any other reasons. These lessons include improving the targeting of cash transfers, scaling up wage subsidies in supporting worker retention and hiring and leveraging upskilling/reskilling initiatives with a focus on non-routine cognitive analytical and interpersonal skills.

2. Malaysia's Experience during the COVID-19 Pandemic

   Many workers and businesses in Malaysia were impacted by the mobility restrictions, and employment and broad economic conditions ebbed and flowed following the variations in strictness of the MCO. At the macro level, mobility restrictions and business closures adversely affected Malaysia's economy, resulting in a 5.5 per cent year-on-year drop in GDP in 2020. Given the easing of restrictions, Malaysia experienced a 3.1 per cent year-on-year growth in GDP in 2021. The slowdown of the economy in 2020 led to a sharp increase in unemployment; the unemployment rate increased from 3.5 per cent in the first quarter of 2020 to 5.1 per cent in the second quarter of 2020, before decreasing to 4.8 per cent in the fourth quarter of 2020. It continued to decrease in 2021, reaching 4.3 per cent in the fourth quarter. In parallel, the number of people outside of the labour force--which captures those who are jobless but not available to begin work or actively looking for a job, perhaps due to the difficulty of job search during the COVID-19 environment--also increased. (2) In the first quarter of 2020, there were 7.2 million people outside of the labour force. In the second quarter of 2020, this number had increased to 7.4 million and then moderated slightly to 7.3 million in the third quarter of 2020. In 2021, the number hovered at about 7.4 million throughout the year (see Figure 1).

   Existing research documents that Malaysia's mobility restrictions disproportionately affected the poor and those without standard employment contracts. World Bank (2021a) shows that workers with lower levels of pre-pandemic income, less education, and youth and older workers were more likely to have stopped working during the pandemic. Informally employed workers (defined as those who do not make contributions to either the Employees' Provident Fund [EPF] or the Social Security Organization) were also comparatively more likely to have lost their job during the pandemic, particularly if they had worked in sectors requiring high levels of physical contact. Overall, 39 per cent of informally employed workers had stopped working at some point since March 2020 (World Bank 2021a).

   As part of eight COVID-19 economic stimulus packages introduced in 2020 and 2021, Malaysia implemented a series of social protection and employment-related measures. Three out of four stimulus packages introduced in 2020, Prihatin, Prihatin Plus and Kita Prihatin, focused on social assistance, and in particular included cash transfer programmes broadly channelled to the bottom 40 per cent and middle 40 per cent of the income distribution. The fourth package, Penjana, had a greater focus on labour market programmes while the economic stimulus packages introduced in 2021, Permai, Pemerkasa, Pemerkasa+ and Pemulih, primarily emphasized supporting businesses. A wage subsidy scheme was introduced in the first package, Prihatin, and was extended in all seven subsequent packages, with differing parameters. Other employment-related measures included reduced EPF contribution rates and easier access to EPF savings accounts, incentives for training and hiring, social insurance coverage for some gig workers, incentives to support work-from-home arrangements as well as childcare subsidies. Overall, the direct fiscal injection from Malaysia's response on social protection and employment-related measures over 2020 and 2021 totalled RM60 billion or...