Rise in retrenchments ‘not alarming’ yet

PETALING JAYA: The rise in retrenchment numbers recently due to the current economic downturn is not yet alarming compared with levels experienced during the dot-com bubble burst in 2001 or the global recession in 2009.
Economist and dean of the school of business at the Malaysia University of Science and Technology Dr Yeah Kim Leng told SunBiz that the jobless rate of 3.2% as at end-2015 is still within the range of full employment.
According to Bank Negara Malaysia’s (BNM) 2009 annual report, the country’s unemployment rate reached 4% in the first quarter of the year, from 3.1% in the fourth quarter of 2008.
Furthermore, Yeah believes that the economy is not likely to turn into a quicksand despite the weak ringgit and commodity prices, fears over China’s slowdown, as well as current soft patch, given its strong linkages, especially the export-oriented industries, to the world economy.
“Current indicators do not suggest that economy is heading towards a downturn. The consensus view is that the economy is moderating from 5% growth last year to 4.0%-4.5% this year. Should growth undershoot, there are various fiscal and monetary tools at the government’s disposal,” he added.
However, Yeah noted that if a significant number of employees lose their jobs and source of income, overall (domestic) consumption, which accounts for slightly more than a half of the gross domestic product, would slow down.

“Lower consumer spending in turn negatively impacts domestic sales thereby creating a vicious down-cycle. Faced with weak sales, firms respond by reducing production and cutting back spending thereby dampening overall economic activities,” he said.
To lift up the economy, Yeah suggested that the government improve its delivery system, especially in bringing down the cost of doing business, boosting business efficiency and creating a competitive business environment.
“Coupled with more focused efforts to attract both domestic and foreign direct investment, which are necessary to boost job and wage growth, the economic slowdown instead of being seen a threat can be viewed as an opportunity to remove the structural or long term impediments to growth and employment creation,” he added.
Meanwhile, Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew remarked that reskilling and preparing for a career switch is “not very viable” when there are few growth industries to absorb such reskilled people.

“Employers are hamstrung. Businesses inevitably observe the primacy of the profit objective. When revenues fall, they will inevitable cut costs include staffing. Companies can hardly be blamed,” he added.