Some 50,000 industrial workers may lose their jobs by year end due to inevitable closure of several manufacturing factories across Penang, warns the Malaysian Trade Union Congress (MTUC).

mtuc nikko workers forum 030708 03 Most of these workers will be from the electronics, electrical and textile sectors, which had been squeezed by escalating inflation rate, according to its Penang branch chairperson Abdul Razak Abdul Hamid today.

The red alert is bound to rattle the federal and state governments and the employment sector as the retrenchment spree in Penang could well set the trend across the country.

In view of that, Abdul Razak urged the federal and state labour authorities to act fast and undertake swift pro-active measures to ensure that affected workers will be duly compensated in the event of retrenchment.

He suggested that the authorities probe troubled companies to get first-hand information and initiate immediate steps to ensure smooth retrenchment payouts.

Many factories severely affected

“Perhaps it's time to kick-start the Employment Retrenchment Fund too for all workers, something MTUC had struggled for all these years," he said.

MTUC, the country's biggest workers umbrella body, has received information that factories have been severely affected by escalating production and operation costs due to the recent fuel price hike.

Their cause is not helped by the current global recession in electronic and electrical industries, especially in the United States and Europe, and hike in commodity prices.

Many factories have began to implement stringent cost cutting measures, like reducing production, overtime, shift work, trips of factory buses, utility bills and hostel facilities for outstation and foreign workers.

For instance, about 300 textile workers from Penfabric group have been forced to stay in congested company hostels at Sri Murni apartment in Bayan Baru since last week, while many factories have cut down the number of trips of their company buses.

Indications are if the factories, especially the multi national companies (MNCs) cannot cope with the current inflation and recession, they would close shop and leave their workers stranded.

Thus, thousands of local and foreign workers will lose their livelihoods and may not even be compensated.

mtuc nikko workers forum 030708 05 "It's up to the government now to implement stringent policies and laws to stop these companies from leaving without paying a single sen in compensation to retrenched workers," said Abdul Razak.

On Monday, Japanese electronic toy manufacturing company Nikko Electronic Berhad ceased its Prai plant operations on the mainland and retrenched 948 local and 73 foreign workers without compensation.

MTUC is now assisting them to receive compensation according to the Employment Act 1955 and Industrial Relations Act 1967, while the state investment coordinating body, InvestPenang is working closely with the labour office in Butterworth and major MNCs to recruit the retrenched workers.

Slow response in Nikko's case

MTUC has urged factories in the state to give employment priority to ex-Nikko workers over foreigners. The union has also suggested to the Human Resources Ministry to impound the passports and other travel documents of Nikko directors to prevent them from leaving the country without settling the matter with their workers.

Drawing similarities to the current economic crisis with the recession period during the mid-1980s, he recalled that several factories ceased operations and their directors fled the country without paying a single sen to Malaysian workers.

"The government should not allow this to be repeated," he said after meeting some 200 retrenched Nikko workers. Also present was MTUC state secretary K Veeriah.

mtuc nikko workers forum 030708 06 The retrenchment benefits for workers stipulated under Regulations 1980 of the Employment Act include compensation of wage between 10 and 20 days per year and for annual leave balance between nine and 20 days.

Quantum of benefit sum will depend on the employee's length of service.

A second board listed company, Nikko only informed the KL Stock Exchange on Monday morning that it would close down its Prai facilities on the very day, citing reduced exports and demands, and cost increase as main reasons for its closure.

Abdul Razak chided both federal and state governments for their slow response to the workers in their hour of need, cheekily suggesting that perhaps "it's not an election period."