INDUSTRY experts say the shrinking number of job vacancies in the country is due to companies adopting a “wait and see” approach, putting on hold any expansion plans because of economic uncertainty.
Other worse-affected businesses which cannot afford to wait, they said, are downsizing, contributing to the rising number of retrenchments that totalled 6,547 until July this year.
While retrenchments are pressured to rise, what is worrisome is that the number of job vacancies has been on a decline over the past few years. The new openings for jobs have fallen from 1.62 million jobs in 2012 and 1.4 million in 2013 to only 1.07 million last year.
The biggest drop in vacancies was seen in the manufacturing sector, followed by the services sector.
Vacancies in the manufacturing sector fell from 598,890 in 2012 to 352,784 positions last year, a massive 45% drop in just three years.
Retrenchments in the sector was also the highest last year with 5,716 job cuts.
In the services sector, job vacancies went down from 369,983 in 2012 to 275,199 available positions in 2014, while retrenchments were up by an additional 1,151.
The construction sector also saw fewer job vacancies last year, with only 202,878 positions compared to 310,954 two years earlier.
Vacancies in the mining and quarrying sectors saw a marginal increase, up 19% from 2,180 to 2,605 jobs. But conditions have soured in the mining industry led by the slump in global crude oil prices.
The sector saw retrenchments surge almost four-fold from only 81 in 2012 to 318 job cuts last year.
Economist Yeah Kim Leng says the authorities must scrutinise data very carefully to find out to what extent the drop in job opportunities are due to the slowdown in investments and business expansions.
“The Government needs to look at the factors affecting business confidence and the measures to alleviate these factors.
“Given that the investment pipeline seems healthy, the declining number of vacancies is very surprising,” he says.
Yeah expects the situation to improve in the second half of next year, once the Chinese economy stabilises and commodity prices recover.
The Government is currently mulling the possibility of setting up an Employment Insurance Scheme to help retrenched workers in the country.
Deputy Human Resources Minister Datuk Seri Ismail Abd Muttalib said early this month that the scheme, aimed at helping retrenched workers through temporary financial aid, reskilling and upskilling, was announced in Budget 2015 last year.
“In Malaysia, during the economic crisis of 1997-1998 and 2008-2009, we had a steady increase of unfair dismissal cases filed at the Industrial Relations Department.
“After those periods, the cases returned to a normal pace. With an economic downturn possibly occurring in the near future, we are getting worried that dismissal and retrenchment cases would go up tremendously,” he said.
The total job loss in Malaysia as a result of the 2008/09 global economic crisis was around 40,000, out of which around 60% were in the manufacturing sector.
This was less severe compared with the estimated total job loss of 84,000 during the 1997/98 Asian financial crisis.
The unemployment problem in Malaysia during the global economic crisis was somewhat cushioned by the “more considerate” strategies taken by companies, which included cutting down their operating hours or days and reducing the salaries of their workers, so as to retain as many workers as they possibly could, instead of cutting headcount.
Weak business sentiment
Although there has been an increase in investment approvals by the Malaysian Investment Development Authority, Yeah says, business sentiment needs to be monitored.
“We must monitor closely to see if they are going ahead with their investments or are pulling out,” he says.
Business conditions in Malaysia have deteriorated this year, with the Business Conditions Index by the Malaysian Institute of Economic Research painting a grim outlook after the second quarter of the year.
The index fell to 95.4 points from 101 points in the previous quarter. A reading below 100 indicates pessimism.
It also found that the local and export sales outlook was bleak, and capacity utilisation rate had dipped further.
The survey, conducted each quarter to assist in assessing the short-term economic outlook, covers a sample of over 350 manufacturing businesses operating in 11 industries.
Areas explored include production level, new order bookings, sales performances, inventory build-up and new job openings.
In June, Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said although Malaysia had more than 400,000 people looking for jobs at any given time, the Government had set a target that 75% of graduates would find employment within six months of graduation.
According to the latest numbers from the Department of Statistics, in July this year, there were 459,900 Malaysians unemployed compared to 394,100 in July last year, a 16.7% increase.
The unemployment numbers have been on a rise every month since April this year, from 429,000 to 460,000 persons jobless in July.
Malaysian Employers Federation executive director Datuk Shamsuddin Bardan says the situation is worrying as it means that many graduates would not be able to secure employment due to the shrinking number of vacancies.
“The ability to create middle-level management vacancies is a challenge now due to the economic condition.
“Nobody is sure what is going to happen, so companies have adopted a wait-and-see attitude.
“They are not making any new commitments. They are just maintaining what they have – if possible – or downsizing,” he says.
Shamsuddin says employers need the extra confidence from authorities in order to fix the situation.
“To stimulate employment, incentives have to be given directly to the sector. For example, there are incentives for companies that hire women who have been on a career break for over six months.
“The same can be done for companies that hire fresh graduates, for example, who have not secured jobs after a certain period,” he says.
This, he says, could be in the form of salary subsidies for the first few months.