Although reports of lay- offs by different companies in the past year have caused some anxiety on the labor market, economists say that they are not yet of alarming proportions. They believe that is an integral part of the evolving labor market.
“If the decline is persistent and spread across different sectors and industries, a more pronounced than expected slowdown in the overall economy will be a cause of concern”,Sunway University Business School economics professor Dr Yeah Kim Leng told reporters.
“To date, however, the reduction appears to be specific to industries that face more challenging operating conditions, such as increased competition in companies or production costs,” he said.
Yeah also said that the cause of retrenchment varies across firms and industries.
“These would include excess capacity, rising inventories, minimum wage increase, a weak ringgit, declining export or domestic sales, entry of new players and disruptive business models rolled out by new start-ups,” he added.
In its 2019 Market Outlook Report published last Thursday, Randstad Malaysia pointed out that large-scale construction and property recruitment activities have slowed since May last year, when the government reviewed large-scale infrastructure projects such as the Kuala Lumpur-Singapore high-speed rail, the East Coast Rail Link and the mass rapid transit line 2.
“Companies will not need to mass hire people to complete the project within a relatively short period of time. With the extended deadlines, companies can hire fewer people for the project, spreading the manpower cost across a longer period,” its manager of the construction, property and engineering team Alex Sin said.
“Unfortunately, this means that retrenchments will likely take place in the first half of 2019,” he said, adding that junior-level workers who have less than two years’ experience will be most affected by the retrenchment exercises.
Despite pockets of retrenchments and downsizing, Sunway University’s Yeah opined that the overall labour market is holding up well.
He further said that with the current unemployment rate rising from 3.3 percent to 3.4 percent, employment growth is equivalent to an increase in the workforce. There is also an average moderate salary increase of 5 to 6 percent, he added.
“A hopeful sign is the sharp pickup in investment approvals last year would translate into higher employment creation expected over the next two to three years, including 2019 when the projects are implemented,” Yeah explained. -THE EDGE MARKETS