Slack in the labour market – shortfall in demand for labour, relative to the supply of available workers in the economy – is expected to reduce further as well supported by continued strength in the employment recovery momentum, it said in its Economic & Monetary Review 2022 report.
“This is supported in part by the gradual re-entry of foreign workers alleviating residual labour shortages,” it said. “Besides, the uneven recovery continues to impact vulnerable groups such as women, youth and low-skilled workers,” it said. “Although monetary policy is primarily a countercyclical tool, it is heavily interdependent with structural policies, which affect an economy’s ability to withstand shocks.
It said these include an over-reliance on the low-cost production model, the low creation of high-skilled jobs and significant skills mismatches.