Labour force participation rate and unemployment rate: a Malaysian perspective / Aqila Nawwara Ahmad Fauzi, Siti Nur Najiha Razali and Nurul Nisa’ Khairol Azmi

During the COVID-19 outbreak in early 2020, Malaysia’s unemployment rate increased from 3.26 per cent in 2019 to 4.54 per cent in 2020. This study aims to forecast the unemployment rate for the next four quarters. Additionally, to determine the impact of the labour force participation rate on the unemployment rate. Data for this study were collected quarterly from the Department of Statistics Malaysia (DOSM) covering the period from 2015 to 2023. The methodologies employed include vector autoregressive (VAR) and impulse response function (IRF) analyses. The findings reveal that the unemployment rate was forecasted for four quarters ahead and the IRF analysis indicates that economic shocks have a significant and lasting impact on the unemployment rate.