The 4 key details of unemployment in Malaysia you need to know.

The Covid-19 most significant impact on the world is the massive job loss and the ensuing economic downturn. Here’s what we understand about it so far.

1. Expect millions of jobs lost by the end of 2020

Malaysia’s Employers Federation (MEF) predicts as many as 2 million Malaysians may lose their jobs this year. In addition, according to the Malaysian Institute of Economic Research (MIER), between 1.5m to 2.4m jobs may be lost in 2020.

2. The 5 most vulnerable sectors

The sectors which took the biggest hit (Travel & Tourism, Wholesale & Retail, Construction, Manufacturing & Agriculture) will have an estimated 1.67 million jobs lost.

SectorEstimated Jobs at Risk
Travel and Tourism1 million
Wholesale and Retail240,000
Total1.67 million

3. Stimulus programs may not be as effective as we think

The Wage Subsidy Program (WSP) and the Employment Retention Program (ERP) have definitely helped businesses but no evidence that they have ‘saved’ 2.4 million jobs

 Some of these companies would have continued to operate even without the wage subsidy program. At the same time, there would have been other companies which did not sign up for the WSP because they couldn’t afford to continue to keep the same number of staff on the payroll for the next 6 months, which is a condition for applying for the WSP.

One important indicator of the loss of employment (other than the official unemployment figures reported by the Department of Statistics Malaysia or DOSM) are the reports to the Employment Insurance System (EIS) made by individuals who have been retrenched. The EIS center has made available these retrenchment figures for 2019 and also for the months of January to April 2020. The loss of employment (LOE) increased from 5262 in March 2020 to 21745 in April 2020, a four fold increase! Reported retrenchments increased by 500% from 3571 in April 2019 to 21745 in April 2020!

4. Key policy recommendations

  • Pass a COVID Relief Bill
  • Targeted incentives and policies to revive the most affected sectors
  • Extended financial assistance to businesses and cash transfers to individuals especially those without EIS protection

Some of this increase in unemployment would be borne by the foreign worker population which makes up 15% of the total work force (using official foreign worker figures). But it would be a mistake to think that all of the foreign workers will lose their jobs first before Malaysian workers. This is very dependent on the industry in question.

What does this mean from a policy perspective?

Firstly, some of the jobs losses and shops and businesses closures could have been prevented if Malaysia had been more pro-active and passed a COVID Relief bill before the beginning of the MCO. Singapore passed its COVID-19 (Temporary Measures) Act 2020 in early April 2020 which provided temporary relief measures for certain contractual obligations which companies could not meet because of the COVID crisis.

Secondly, with local transmissions having come down significantly, the government should focus its efforts on having specific plans to revive those sectors most affected by the COVID crisis. In the travel and tourism sector for example, the lifting of interstate travel after the 9th of June 2020 would help domestic tourism. Re-emphasizing the government’s commitment to the economic stimulus package which was announced by then Prime Minister, Dr. Mahathir, at the end of February 2020, which includes measures to stimulate the domestic tourism sector including digital vouchers for local travel, would also be somewhat helpful.

Thirdly, the government should increase its assistance to businesses and individuals beyond the already announced plans. Bank Negara’s allocation for the Special Relief Fund (SRF) should be increased beyond the RM10 billion already allocated. The Bantuan Prihatin Nasional (BPN) assistance should be extended beyond June and be given to those who have lost their jobs and livelihood and are not registered under the EIS. Other financial assistance should be also considered.

If the loss of employment figures are not taken seriously, any further action by the government may come too late and the increase in unemployment to between 8% and 14% will have serious societal as well as economic implications.

Read Ong Kian Ming’s full analysis on Covid-19’s impact on job loss here: https://dapmalaysia.org/en/statements/2020/06/05/29884/

Leave a Reply

Your email address will not be published. Required fields are marked *