Page 93 - Contributed Paper Session (CPS) - Volume 4

CPS2132 Siti Nurliza Samsudin et al.
Employment and Salaries & Wages Statistics Report (2016), which is based on
the Economic Census (EC) 2015.
The challenge in computing employment data is due to the multiple
sources available. Particularly at DOSM, two approaches are used, which are
the household approach (LFS) and the establishment approach (Economic
Census, Monthly Manufacturing Statistics (MMS) and Quarterly Services
Statistics (QSS)) -- all of which employment data is collected but is referred to
different coverage of the labour force. The household approach covers the
entire labour force, including those employed in the informal sector whereas
the establishment approach covers only registered organizations and hence
by definition, those employed only in the formal sector. While the LFS covers
more, its data is based on a sample of which the sample stratification does not
include industry. Hence there is high possibility of error when using data at a
very granular level. For industries of which there is more formal employment
such as Finance and Insurance, data from the Census can be more reliable.
In order to compute employment multiplier, which reflects creation of jobs
based on the industrial nature, employment data needs to be adjusted and
estimated. This study will compute employment multiplier based on
employment data estimated using combination of LFS 2015 and EC 2015, by
considering the structure of formal-informal employment in the sector.
The employment multiplier is important as it is a way to measure number
of jobs created in economy, resulted from an increase of the output. In
addition, employment multiplier provides opportunity to the country to
reduce widespread unemployment and to improve people’s wellbeing
(Ntibanyurwa, 2008). There are two types of employment multiplier, Type 1
and Type 2 multiplier. Type 1 multiplier captures the indirect effects,
meanwhile Type 2 multiplier captures both indirect and induced effects.
According to Cetnarski (2011), direct jobs are related to the specific industry,
indirect jobs are those that support the industry while induced jobs are those
that are a result of direct or indirect employee’s spending money in the
community. Generally, industries with a higher multiplier are more desirable
(Cetnarski, 2011).

2. Methodology
There are a few of economic models to estimate employment multiplier,
one of them is using Leontief inverse model. According to Siti Rahmah and
Nurul Naqiah (2015), the basic equation of Leontief inverse which also known
as the basic multiplier model in input-output is written as follows:

-1
Qt = (I-A) * ft
Q = Vector of domestic product
I = Identity matrix

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