Economic slowdown More job losses in the offing
The global economic slowdown is slowly creeping onto Malaysian shores leaving many worried about the impact it will have on workers. Although Malaysia’s financial institutions and banks are in better shape than they were during the East Asian financial crisis in 1997, the economy is already feeling the effects of the recession in the West. Economic growth for the country is projected at 3.5 percent for next year but even that could be optimistic. Some analysts are not ruling out an economic contraction and there is growing concern that workers, both Malaysian and migrants, could be vulnerable.
“The recession here next year could be worse than the Asian crisis in 1997,” warns economist
Subramaniam Pillay, an associate professor in international finance at Nottingham University’s campus in Malaysia. “It would be more like 1986, when commodity prices slumped and exports weakened, prompting factories to retrench workers.” Now there are similar fears that as consumer demand in the West falters, exports here could slide and factories could once again shed workers before long.
With the experience of the recession of the mid to late 1980s in mind, activists have been calling for a comprehensive social security plan. Increasingly, calls are being heard for a national retrenchment fund to protect workers in anticipation of possible job losses. The government has said it is considering this “but even if they start it off now, the fund won’t be big enough to handle the recession next year,” warns opposition parliamentarian Jeyakumar Devaraj.
The Malaysian Trades Union Congress has proposed that employers and employees should each contribute one ringgit per worker to the fund. With around five million salaried workers in the private sector, such a retrenchment fund could collect more than 100 million ringgit (27 million US dollars) in a year. “But there is no commitment from the government up to now,” laments Devaraj. “Instead, we see them injecting 5 billion ringgit (1.38 billion dollars) from the (state-managed) Employees Provident Fund (a retirement fund for workers) into the stock market.”
Some have pointed out Malaysians will be cushioned from job losses by the presence of these
migrant workers who could be the first to lose their jobs. But that may give a false sense of security as thousands of Malaysians are also employed in free trade zones especially as operators in the electronics multinational corporations.
Meanwhile, the government has announced a 5 million ringgit allocation to re-train retrenched
workers. Human Resources Minister S. Subramaniam said the government would top up 1 ringgit for every 1 ringgit spent by employers to retrain workers and upgrade their skills. From Nov 1 this year, all skills upgrading retraining programmes would receive full financial aid. In addition, the government has also announced a 7 billion ringgit (1.93 billion dollars) economic stimulus package of pre-emptive pump priming. Devaraj says instead of giving out large infrastructure contracts to private contractors who may hire low-wage foreign workers, the Public Works Deparment could hire temporary local workers directly as “work brigades”, which he says would be a more effective way of creating a multiplier effect for the local economy.
Despite the fall in oil prices, many Malaysians are still finding it hard to cope with the cost of living especially higher food prices, which particularly squeezes the poor. On Nov.17, the government slashed the pump price of petrol from 2.15 ringgit per litre to 2 ringgit — the fifth reduction in recent months as global prices sank to 55 dollars per barrel. But many noticed that the local pump price is now still higher than it was on Jun. 5 when petrol prices were then raised by 41 percent to 2.70 ringgit (75 US cents) at a time when the global oil price was around 125 dollars. The effect of the Jun. 5 oil price hike is still being felt. Even as the pump prices locally were reduced, food prices — driven up by commodity speculators and local retailers — have not fallen correspondingly.
Even the poverty line has come under scrutiny. Though the official threshold for monthly household income was raised a couple of years ago from 588 to 691 ringgit (162 to 190 dollars), many analysts feel that that benchmark for measuring poverty is grossly understated. A more realistic poverty line could be double that figure, putting many more Malaysians — up to 30 per cent in the industrialised state of Selangor — in the poverty bracket. Devaraj notes that recent global events have proven that the neo-liberal model — with its accompanying assumptions of deregulation and the unchecked pursuit of wealth — has had adverse results ranging from climate change to worsening food security to imbalances in the distribution of wealth between and within nations. “So we need to look at new and alternative paradigms of development,” he says.