economic report

The number of retrenched workers in Malaysia increased by 37 percent during the first seven months of this year to 20,038, of which 85.7 percent were locals.

The 2001/2002 economic report noted that the labour market conditions weakened in the first seven months of 2001 as industries undertook measures to counter the impact of the global economic slowdown

By sectors, retrenchments in the manufacturing sector particularly in the electronic and electrical sub-sectors, were the highest, accounting for 69.4 percent of the total, according to the report.

It pointed out that the finance, insurance, real estates and business services recorded 1,641 retrenchments; wholesale and retail trade, hotels and restaurants affected 1,472; while social services sectors saw 1,179 retrenchments.

The report indicated that Penang, the major centre of electronics industry in Malaysia, recorded the highest number of retrenchments with 5,102 workers, mainly among hard disk manufacturers.

According to the report, the retrenchments in Selangor and Johor were also high with 4,200 and 3,695 workers, respectively.

Weakening labour market

The number of employers who had retrenched workers increased by 40.2 percent to 732 compared to 522 in 2000.

In spite of larger retrenchments and higher number of job seekers, active registrants declined by 6.3 percent to 34,072 by end-July 2001. The decline was mostly among administrative and managerial workers (40 percent), production and related workers as well as transport equipment operators and labourers (14 percent).

At the same time, in spite of weakening labour market conditions, job vacancies increased marginally by 0.9 percent to 70,394 vacancies as at end July 2001.

"Although skills mismatch is one of the factors contributing to the vacancies, especially at the higher job category, labour immobility, particularly trans-regional contributed largely to increased vacancies," said the report.

In the light of higher retrenchments, efforts have been made to increase the opportunities for workers to be retrained through the greater utilisation of the Human Resource Development Fund.

As part of the efforts to increase the number of skilled workers, especially in Information Communication Technology, in line with the strategic transition into K-based economy, the government undertook to upgrade existing training institutions as well as establish five new ones.

"With this, industrial training capabilities will be increased from 4,000 to 17,000 persons annually. At the tertiary level, the number of students graduating from universities is estimated to increase by 15.5 percent from 59,584 in the year 2000," stated the report.

Subdued wage pressure

In the light of excess capacity prevailing in the economy, wage pressures are expected to remain subdued.

The report said that in the first six months of this year, 200 collective wage agreements signed, covering 57,047 workers.

Average wages in the manufacturing and agriculture sectors showed an increase of 7.7 percent and 8.3 percent, respectively.

In the plantation sector, the government agreed on minimum monthly wages of at least RM325 for oil palm plantation workers effective from Jan 1, 2001.

The report showed that the average wage per worker in the manufacturing sector increased to RM1,455. On the other hand, real average wage per worker increased marginally by 0.9 percent (Jan-Jul 2000: 4.45 percent), after taking into account price changes.

With real average wage continuing to increase and labour productivity contracting, real labour cost per unit of output rose by 7.6 percent (Jan-Jul 2000: minus 11.7 percent) . This was reflected in the increase in unit labour cost in the electrical, electronics and machinery industries, wood-based industry as well as textiles and chemical industries.

Stable industrial relations

The report pointed out that the industrial relations remained stable during the first seven months of 2001, with 10 strikes taking place during the period, two more than the corresponding period of 2000.

The number of workers involved were, however, significantly lower at 1,342 workers compared with 2,580 in 2000. Six cases were recorded in the manufacturing sector involving 979 workers, and two in the agriculture sector involving 128 workers.

A total of 3,371 man-days were lost as a result of these strikes which were mainly attributed to disputes and dissatisfaction over the terms and conditions of employment, dismissals and retrenchments.

As the agriculture, construction and manufacturing sectors continued to face labour constraints, the government approved the recruitment of 93,025 new foreign workers to ensure that business expansion was not affected by labour shortages.

Such approvals, however, were lower by 22.8 percent compared with the previous year (120,502 in 2000).

Skilled foreign workers

However, the number of registered foreign workers increased by 10.6 percent to 810,692 workers as at end-June 2001, compared with 732 ,588 in 2000, with 38.5 percent or 311,785 of workers employed in the manufacturing sector.

Similarly, foreign workers in the agriculture sector increased by 16.4 percent to 204,814 (2000:175,834) while in the construction sector, by 3.7 percent to 68,355 (2000:65,891).

The economic report highlighted that Indonesia accounted for the largest number with 598,900 workers, followed by Bangladesh (147,637), the Philippines (15,323), Thailand (6,538) and 42,297 workers from other countries.

On the recruitment of foreign workers, only 12,705 in the first six months of 2001 were skilled workers.

India recorded the largest number of skilled foreign workers approved, totalling 2,489 workers or 19.5 percent of the total, followed by Japan (1,537 or 12.4 percent) and China (1,007 or 8.1 percent).

In terms of occupational groups, directors accounted for the largest number of foreign workers (1,269), followed by managers (1,237) and engineers (967).

Employment prospects

Economic report said employment prospects for the whole of 2001 seems to be more subdued in the light of the slowdown in the world economy, which will continue to adversely affect the manufacturing sector, particularly export-oriented industries.

"With the smaller increase in labour force of 2.4 percent (2000:4.3 percent), however, the employment rate is expected to be contained at 3.9 percent of total labour force. Thus, the economy is expected to continue to operate at full employment," read the report.

Given the weak outlook for the export oriented-industries, employment creation is expected to be generated in the domestic-oriented sectors.

Employment in 2001, is therefore, expected to increase by 1.5 percent as compared to last year's 4.6 percent, largely from the services sector, notably finance, insurance, real estates and business services.

However, manufacturing only recorded marginal increases of 0.6 percent. This marginal increase, which traditionally has been the largest provider of employment opportunities, is the main contributing factor to the overall low employment growth.

A number of industries, notably electronics which contributes 68.5 percent of operations, resulting in reduced employment in the face of declining demand for electronic products and components.

With rubber prices remaining low and logging industries subjected to sustainable forestry practices coupled with scarce available of new logging areas, employment in the agriculture, forestry and fishing sector is expected to decline.

The contraction in marine fish landing sub-sector has also constrained new employment opportunities in the sector.