Job Losses Increase by 42% in Q1 of 2020

Due to the Covid-19 pandemic, job losses in the country has increased by 42% year-on-year for this first quarter (Q1 2020), according to the Social Security Organisation’s (Socso) Employment Insurance System (EIS). 

Based on a report by EIS, the pandemic has affected many businesses. These businesses experienced a decrease in demand at 37% while 42% of them were unable to operate as usual.

The report predicted that the trend will accelerate from April 2020 onwards, as job losses increase by 50% to 200% year-on-year for each following quarter in 2020. It is also expected that the unemployment rate will reach 4% in 2020 compared to 3.2% during the 1997 Asian financial crisis and 3.7% during the Great Recession in 2018.

Meanwhile, the retrenchment numbers are predicted to be similar to those during the 1997 Asian financial crisis due to the pre-emptive measures of Employment Retention Programme (ERP) and Wage Subsidy Programme (PSU) taken by the government to stop mass firings.

The Demographics

"The youth unemployment rate has remained mostly steady at 8-11%. However, they are the age demographic most vulnerable to retrenchment. 

"Male workers are more likely to be retrenched than female counterparts at 60% male to 40% female, this may simply reflect the fact that there are more men than women in the workforce," the report said. 

Most Affected Sectors: Tourism & Manufacturing

According to the report, out of 7.5 million active employees registered with SOCSO in 2019, 1.458 million worked in a tourism-related sector, while 1.457 million worked in manufacturing. 

"It should be no surprise then that over half of business closures occurred among large employers of over 200 workers in the tourism sector, while the manufacturing sector retrenched the most workers at 23% of the total to reduce overhead costs after being forced to shut their factories," it said. 

Manufacturing sector workers were heavily affected. 

Employers who have yet to retrench staff are embarking on cost-cutting measures nonetheless.

"One of the most popular methods is to reduce salary, especially for employees who have been employed for more than five years as their salaries are typically 45 % higher than those of shorter-tenured employees," it said. 

Job Losses, by State

79% of all job losses occurred in five states, namely (in order) Selangor, Kuala Lumpur, Johor, Kedah, and Penang. Selangor ranked highest with 32% job losses. Do note, however, that 30% of all jobs are located in Selangor.

For states such as Kelantan, Melaka, Negeri Sembilan, Perak, Sabah, Selangor, Kuala Lumpur, and Labuan, job losses were concentrated in tourism-related industries.

"On average, each employer had 15 foreign workers for each retrenched employee. The ratio was even higher in large companies with more than 200 workers, which had 69 foreign workers for each retrenched employee," it said. 

PSU applications have indicated that 79% of businesses were unable to operate during the Movement Control Order (MCO) and suffered decreasing sales as a result. 

"About 7% of companies are unable to support themselves for over 6 months on current reserves if the outlook does not improve soon.

Source: BERNAMA

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