WE are in for a tough year ahead as the world begins to feel the impact of its worst economic crisis in decades and one that is set to be prolonged. Recession-stricken US is yet to see any flicker of light from the tunnel it has dug itself in and Europe is already reeling from the crunch.Analysts also doubt whether Brazil, Russia, India and China – countries touted as future economic dynamos, will be able to stem the slowdown.No country will be immune from the effects of the crisis and Malaysia, a major trading nation, has certainly been hit. Exactly how badly the full impact will be, remains to be seen.

The manufacturing sector which depends on exports and overseas demand, is already under a cloud of gloom.Some factories have begun to shorten their working week or reduce the number of shifts. Many have given notice that they will retrench their workers soon. Human Resources Minister Datuk Dr S. Subramaniam confirmed that 137 employers, mostly in the electronics sector, will retrench close to 5,000 workers.Labour officers are now monitoring factories in Penang, Selangor and Johor where lay-offs may be inevitable.

The manufacturing sector employs 1.1 million people or 10% of the total Malaysian labour force of 11.1 million. There are 2.2 million foreign workers employed legally, including 700,000 in the electronics sector.Among the options mulled by the ministry to ensure jobs for locals is a temporary freeze on the hiring of foreign workers. The Malaysian Institute of Economic Research (MIER) expects the unemployment rate to rise to 4.5% this year but trade officials fear that it could be higher.

Without significant new foreign direct investments, contraction of the economy to below 3% and with 30,000 new graduates entering the job market yearly, the jobless rate could soar up to 8%. How is Malaysia bracing itself for the impending lay-offs in 2009? Dr Subramaniam says his ministry has already taken several steps.These include two national-level committees to monitor retrenchments and retrenched workers, to be chaired by the ministry’s secretary-general. “Operations rooms have also been opened at state and national levels, and at all Manpower Departments. Representatives of the ministry, employers, labour unions and other bodies representing workers will be involved in the operations rooms,” he told the Sunday Star.

The ministry will coordinate all matters pertaining to retrenchments and officers will visit companies and compile weekly reports to ensure that employers meet their obligations to workers. Dr Subramaniam said the ministry was also in the process of launching a retrenchment fund in addition to the RM170mil approved to retrain retrenched workers, out of which RM70mil will be spent on training unemployed graduates and equipping them with specific skills required by the job market. “We are also holding dicussions with the Federation of Malaysian Manufacturers, the Malaysian Employers Federation and the MTUC on the possibility of reserving certain jobs in all sectors for Malaysians. “Over the next 12 months, we want to reduce the number of foreign workers to between to 1.6 million and 1.7 million from the current 2.2 million,” he added.

Dr Subramaniam said employers planning to impose lay-offs, pay cuts and voluntary separation schemes (VSS) were now required to inform the Labour Department 30 days in advance. Those who fail to comply can face a maximum fine of RM10,000. “The ministry will ensure that companies meet legal requirements of compensation for retrenched workers,” he said. The minister said foreign workers will also be paid in accordance with their employment contracts. As for Malaysian workers who may be retrenched in Singapore, Dr Subramaniam said they should register with the Labour Attache at the Malaysian High Commission.

The Star Online, 4 January 2009

Related Event:  Managing Retrechment & Layoffs, 22 & 23 Apr 2009, Kuala Lumpur  (Please Call: 03-42703086)