PETALING JAYA, July 16: Fewer people lost their jobs in May than in April. But seeing that as a sign of an improvement may be a fallacy.
The moment of truth will come in October, when most of the government assistance dry up, and the moratorium on loan repayments cease.
For employers, this means additional operating costs, as companies need to start servicing their debts despite businesses not picking up to pre-Covid-19 pandemic levels due to lower consumer confidence and tighter spending behaviour.
According to industry players, if no further assistance is forthcoming, the projection that the unemployment rate could breach the 8% mark by the end of the year, with some two million Malaysians expected to be out of a job, could be a reality.
SME Association of Malaysia president Datuk Michael Kang said while unemployment could improve between now and September, it was vital for the government to step in to prevent another round of mass retrenchments.
“At the moment, businesses are only recording about 50% sales compared to before Covid-19. If they are not able to hit 70% by September, they won’t be able to prepare enough funds to service debts,” he told theSun yesterday.
“If the government actively comes up with assistance to drive the economy forward, then I think unemployment won’t reach two million. But if they do nothing, it certainly will.”
Kang was asked to comment on a Statistics Department statement issued on Tuesday that the unemployment rate in the country rose to 5.3% in May from 5% in April, with an additional 47,300 Malaysians out of work, bringing the total to 826,100.
However, the figure is significantly lower than the 168,300 who were retrenched in April.
Kang said to ensure the high retrenchment figure in April is not repeated later in the year, the government could, among other things, extend the loan moratorium at least until the year end.
He also suggested Bank Negara Malaysia have financial institutions loosen requirements for business loans and expedite applications.
“Commercial banks are too slow in processing applications. It has been three, four months but most of the loans have not been released.”
“The small and medium enterprises (SME) in particular need immediate cash injection because without funds, they can’t run their businesses. I really hope the government can pressure the banks to speed up the process and provide the loans,” he added.
Malaysian Employers Federation executive director Datuk Shamsuddin Bardan agreed that the unemployment rate could reach a record high at the end of the year if businesses are not given further assistance.
“The fact that only 47,300 lost their jobs in May could give a false sense of security. We know that the real test will be in October when the incentives stop. Then, employers need to be on their own feet,” he said.
“The question is whether they are able to do so. Looking at the current circumstances, it will be very difficult, as far as the domestic and export markets are concerned.”
Shamsuddin said unemployment could be further compounded by the some 500,000 university students who graduate each year, which could force more Malaysians into the gig economy.
He said prospective job seekers could also expect to see companies hiring on a shorter contract basis as they look to minimise risks and losses.
“What the government needs to do now is ensure they go deeper and bigger with their aid. Increase the funding to help businesses, and extend whatever assistance, including the loan moratorium, until at least December,” he added.
