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COVID-19: RISING RETRENCHMENT

Ahirul Ahirudin
Written by Ahirul Ahirudin

The pandemic is threatening to kill millions of jobs as employers fight to salvage their business and the economy faces the worst unemployment prospect in decades. Retrenched workers, too, may have to adjust their expectations, Ahirul Ahirudin writes.

KUALA LUMPUR – May 16, 2020: Malaysia has one of the best records against Covid-19: its recovery rate from the killer coronavirus is among the highest in the world as its front-liners work miracles to save lives. But saving jobs from the pandemic is proving to be harder.

By the end of the year, there will be more jobless Malaysians than ever, experts agree. Even the optimists among them are projecting a 5 per cent unemployment rate for 2020 (which is still well above the country’s traditional full employment status of around 3 per cent). The Malaysian Employers Federation (MEF), known to have made correct predictions in the past, says national unemployment is likely to be 13 per cent. Or about 2.4 million people without jobs by the end of the year.

At the onset, events manager Julie, 45, was optimistic that the pandemic would blow over soon. She had been working with the Sabah-based company for over a decade, organising international races in the state and in Labuan. But by March, when the Movement Control Order (MCO) was put into place to try and stem the frightening spread of the virus, it became clear that the world was not going to organise any event for months and maybe even longer. 

“People were spooked, tourism started to slump not just here but worldwide, and organisers were postponing and cancelling events. They even postponed the Tokyo summer Olympics to July next year! 

“And when the government introduced the MCO, our company said it could not go on. Just like that, all 40 or so of us lost our jobs,” she told The Mole.

The workers were offered a month’s salary each as compensation, which was considerably less than what the law provides for. “Of course we felt wronged, so we got together and confronted the boss,” she recalled. 

But their employer, as it turned out, was equally in a bind.

“The company bared the numbers to us: the debts it was owing, the assets it was forced to sell, and even our former boss’ own personal bank accounts. He had savings just enough for his own family,” she said. 

These days, her ex boss sells UV lights that boast of helping newborn babies sleep better.

“We (the workers) took the one month’s salary he offered. We decided it was better than nothing,” she added.

In the past couple of months, Malaysians have been fed alarming news on business closures and worker retrenchments almost on a daily basis. The victims include some major corporate names.

One of them is Blu Inc Media, a household name for Malaysia’s glossy magazines. The Petaling Jaya-based company, 70 per cent owned by Singapore publishing giant SPH, called it a day almost without warning and laid off all 200 staff. 

“We are in a period where there is little visibility on when we can see recovery from the economic turmoil resulting from the Covid-19 pandemic,” CEO Azliza Tajuddin wrote to her staff on April 30.

“With the current MCO, our losses continued even for the months of March and April and this trend is expected to continue for the next few months. It is uncertain that we will be able to see any light at the end of the tunnel.”

The Edge, one of the most profitable media companies in the country, was forced to stop printing its 13-year old The Edge Financial Daily and retrenched all contract staffers. “We have no choice. Cut losses and we get to save more jobs than we have to let go,” said an exec.

The Edge’s rival publisher, Focus Malaysia, followed suit this week with the announcement that it would cease its monthly publication and lay of more than half the staff. “Inevitable,” said one manager.

After decades of presence In this country, Esprit Outlet and Esquel Group, both global brands, said they will cease their Malaysian operations from next month (June). BDBO, a big name in advertising, shut its Malaysian office and laid off 20 creative staff.

The hotel industry is one of the hardest hit. Citing a recent survey by Malaysian Associations of Hotel (MAH), The Edge Malaysia reported half the participants surveyed would close their hotels — with 15 per cent considering stopping for good and 35 per cent temporarily. As it is, Emperor Hotel Malacca, Ramada Plaza Melaka hotel and G city club KL have folded while big names like Hilton KL and Hotel Equatorial KL have offered their employees voluntary separation schemes.

Not all retrenchments are blamed on Covid-19. Blue Inc admitted that business had been challenging for some time. The Media Prima group, which has been restructuring its operations in a big way and laid off over a thousand workers since last year to meet the digital challenge, is consolidating. It announced another round of layoffs recently, including the departure of its CEO for TV Network. 

YTL Cement finalised the retrenchment of 122 employees at its Rawang plant (about 3 per cent of the company’s total 3,300-strong workforce) as part of its three-year plan to completely modernise the 70-year old facility, a plan hatched long before Malaysians first heard of coronavirus.

Apart from retrenchment, there are also fewer job opportunities available since the pandemic. Last week, Bernama reported that job vacancies in the private sector decreased by 35,000 spots to 166,000 in the first quarter of 2020. 

Iman Iskandar, 23, who has been looking for a job since graduating middle last year, does not feel too optimistic. 

“Before the pandemic, I would get a few hits in response to my job applications. Now, for many weeks, I have not gotten a single hit. Not only do I have to compete with retrenched workers, who have the advantage of experience, I discovered today that there are actually fewer jobs to go around.

“It is by no way encouraging, especially since I’ve been looking for a job for a year now. I do wonder how much longer I will be jobless,” Iman said.

MEF executive director Datuk Shamsuddin Bardan said he believes retrenchment will be part of the new normal and will occur in all sectors of the economy except, perhaps, plantation and agriculture. 

A good number of companies who have resorted to retrenching staff have been able to meet their obligations in the area of retrenchment benefits due to the employees. Equatorial Hotel, for example, is throwing in a 14-day salary as an ex-gratia payment to each staff who opts for the voluntary separation scheme it is offering. YTL Cement is said to be coughing up some RM9 million to compensate its122 staff retrenched in Rawang. 

But Shamsuddin said there will be companies, like former event manager Julie’s boss, which are going to find it challenging to provide even the most basic compensation package.

“We are aware of cases where employees are being retrenched without being given proper benefits or notice,” he said. 

In those cases, the employers simply just did not have the fund to meet the legal obligations or to give proper notice and pay termination benefits. 

“Employees may get the labour department to go after so-called recalcitrant employers but at the end of the day, when employers can’t meet legal obligation, the employees will end none the richer. They just get their paper judgement,” Shamsuddin said.

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Ahirul Ahirudin

Ahirul Ahirudin