Salary hike prospects ‘bleak’

THE Malaysian Employers Fund (MEF) announced its findings of four latest publications for 2018. The publications focus on the forecast of salary increases and bonuses for 2019. The outlook was “bleak”, according to the survey due to the global recession, increasing social costs and political uncertainties following GE14 which were among factors influencing the employers’ cautious attitude.

A few incentives were placed into the labour structure of the companies surveyed including productivity linked wage system (PLWS) and the Discrimination Reporting Procedure.

About 90% of companies and more indicated that the main reasons that they implemented PLWS was to reward good employees followed by aiming to improve productivity (which more than 80% responded) and to motivate average employees (more than 70%).

The findings also focused on the types of leaves provided where all participating companies provided annual leave and sick leave for top/senior managers, managers, execu- tives and non-executives.

The average total hours of total working hours per week for top/senior managers and managers were considered where they worked 41 hours compared to the executives where the average total working hours per week was 42 hours. In the case of non-executives the average total working hours was 43 hours.

About 42.5% of respondent companies implemented flexible working hours at the workplace. With implementation of flexible work arrangements 82.4% of the respondent companies indicated that there was increased employees’ engagement, commitment and satisfaction, quality of work and quantity of output (62.7%) and the company’s ability to retain talent (62.7%).

The survey for executives and non-executives were participated by 242 companies from manufacturing and non-manufacturing sectors.

The executive report covered 160 benchmark positions of 14330 executives while the non-executives report covered 324654 non executives with 109 benchmark positions. – The Star

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Vanishing Jobs Growth Spells Deep Trouble for South Korea


Not-so-nice figures: Moon has seen his popularity slide amid criticism that he’s hurting employment by
aggressively increasing the minimum wage. — AP

Unemployment and jobs growth in South Korea haven’t looked so bad since the wake of the global financial crisis, undermining President Moon Jae-in’s economic agenda.

Data released Wednesday show the unemployment rate jumping to 4.2 percent, the highest since early 2010, and much greater than any economists forecast. Jobs growth slumped to just 3,000 last month, also the worst figure in more than eight years.

Moon, who came into office pledging to create jobs and raise incomes for regular workers, has seen his popularity slide amid criticism that he’s hurting employment by aggressively increasing the minimum wage.

While pay hikes planned for this year and 2019 are here to stay, Finance Minister Kim Dong-yeon said the government would consider adjusting some policies.

He conceded that the jobs market wouldn’t improve much anytime soon.

Disappearing Jobs Growth

  • Number of jobs added: South Korea added just 3,000 jobs in August, the least since 2010

Source: Statistics Korea

Moon’s administration points to the fallout from corporate restructuring and the shrinking working-age population as the source of the problems in the labour market. Businesses counter that hiking the minimum wage 16% this year, with another bump of almost 11% to come next year, has made job layoffs inevitable.

Small business owners in particular, from convenience stores to fast-food franchises, have shed workers.

Adding to the economic unease in South Korea is the risk that US President Donald Trump may hit car exporters with auto tariffs, even after Seoul agreed to renegotiate its trade deal with the US.

Unemployment Spike

South Korea’s unemployment rate in August reached the highest since 2010
  • Seasonally adjusted unemployment rate
Source: Statistics Korea

South Korean bonds climbed and the won fell after jobs figures, which appeared to squash any near-term prospect of the central bank raising interest rates.

The finance minister said economic policies that are geared toward wage-based growth are moving in the “right direction”. Yet the government also acknowledged the need for more communication and market analysis in order to gain trust from companies and the people, he said.

The presidential office described the recent increase in unemployment as inevitable pain that accompanies a change in the structure of the economy, Yonhap News reported.

Like many other countries, South Korea is experiencing a widening gap between the rich and the poor. It’s confounding policy makers and exacerbating political divisions. — Bloomberg

Retrenchments ahead, says Malaysian Employers Federation

The Malaysian Employers Federation (MEF) believes that more people will get the axe this year due to the current economic challenges.

Apart from the weak economy, contributing factors include the introduction of “disruptive technology” in some industries, it said.

According to its executive director Datuk Shamsuddin Bardan (pic), economic challenges would see bosses reviewing their workers’ requirements.

“I think slightly more workers will be retrenched this year,” he told a press conference after the Taxation and Employer seminar jointly hosted by the Inland Revenue Board and MEF yesterday.

Shamsuddin said in 2015, about 44,000 workers lost their jobs while up to September last year, about 40,000 workers were retrenched.

He said the complete data for 2016 has not been released by authorities yet, but the numbers could be higher than the previous year.

In 2015, said Shamsuddin, about 18,000 of those who lost their jobs were from the banking sector due to the introduction of what he termed as “disruptive technology”, where banks were increasingly adopting online transactions, for example.

Other industries that could be affected, said Shamsuddin, include insurance, manufacturing and construction.

He said for the insurance industry, many prefer dealing with the companies directly for their services, which makes the job of middlemen or agents, redundant.

“However, these agents are not really part of the retrenchment rate because they are considered to be self-employed,” he said.

Asked to comment on the E-kad (enforcement card) programme by the Immigration Department, Shamsuddin said the Government should consider widening the criteria.

He said the programme should be open to illegal workers who do not have permanent employers.

Currently, only illegal foreign workers with valid employers can register and legalise their work under the E-kad programme.

Shamsuddin said by including illegal foreign workers without employers, the source pool for workers can be widened.

By Hemananthani Vivanandam The Star/ANN

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Be an entrepreneur or a politician?

Let your children decide on their employment choice

Most parents in their fifties are looking at retirement options when their children starts looking for employment after their studies. There is this transition moment in our family circle of life where the baton of employment, career or business is being passed to the next generation.

The older generation after 30 years of slogging, looks forward to easier passing of days without the responsibilities and worries whilst the younger generation looks forward with optimism and high hopes of securing a good career ahead.

As an entrepreneur with businesses and investments, my natural instinct is to rope them into the family business, if any, as any typical old generation Chinese businessman will do. But I made up my mind some 7 years ago when my first born started his A Level, that my children will make their own choice whether they will prefer to seek employment elsewhere or participate in the family business. It will be their choice and decision and I will support whole heartedly whatever decisions they will make. 7 years later, I still have the same conviction.

I had this feeling that the business world and environment will be much different with all these globalization and technological advancement and the businesses that I was in will be operating in a much more competitive and disruptive world order. This has proven to be true.

The traditional brick and mortar businesses are under tremendous stress to keep up with new disruptive technologies and new business ideas.

My children will have to learn new skills and insights and they definitely will not be able to learn from my traditional family business unless I had instituted changes to my existing business to join the new business order. But I did not know how.

So it is better that they decide on their choice of employment in whatever industries they choose as long as they are working for a forward looking company who is able to embrace the new technological changes that is changing the business order across the global markets. And if they do decide later after some years of working experience to venture out as an entrepreneur, I will also support them wholeheartedly.

Assuming they are up to it, with the right attitude and skill sets.

Not everyone is capable of being a ‘successful’ entrepreneur. It is easy to start a business, call yourself a founder and entrepreneur but chances of being successful is limited to the capable few. For most cases, you are better off building a good career in a good organization rather than struggling in a small scale business for the rest of your life.

If you planned to be an entrepreneur, just make sure your business potential is scalable to a size that will earned you nett, double what you would be earning in a good job. Or else it will be a waste of time. The thrill of being your own boss wears thin over time when you are not doing well financially.

I have many friends who have done very well in their corporate careers and they seem very happy when we do meet up. They definitely look younger than me, with less stressful lines, a radiant and happy face. Compared to my aged face filled with worried lines and scars of agony suffered through the years. Was it worth it?

With the wisdom of hindsight, I am now able to advise my children on their decision making process on whether they should be a corporate suit or to go on their own. My only guidance to them is whatever choice they make, just ensure their actions are productive and contribute towards the well being of the economy. Don’t be lazy, do good where you can and be as good as you can be. Then start a family. Circle of life starts again.

The only career that I totally discouraged my children from is the job of a politician. Good politicians are hard to find nowadays. Since integrity left the politicians, good virtues and honesty followed. What is left is a shell of a conniving and corrupted politician using whatever means they can to stay in power supposedly representing the people’s interest.

All over the world, the politicians together with religious and racist bigots have caused total mayhem to our daily lives. People are divided by race, religion and skin colour. Nothing makes sense anymore. Throw in lots of money into a politician’s hands and we have absolute corruption across the ranks. Cash is king. Everybody can be bought. And I mean everybody.

What is really sad is the complete breakdown of morality and integrity of the human politician. Where he suffers no shame when he is openly corrupted. When he can sleep well even though he has done many evil things destroying the moral fabric of the society which he swore to protect. I have nothing but despise for these toxic politicians.

The few genuine politicians who stand up their grounds to all are few and far between. Eventually, they too will engulfed by the all pervasive influence of corruption.

To the younger generation joining the working community, my only advice is to pick a job that fits your personality and your skill sets. Make sure you enjoy the job. Get some proper working experience under your belt and you can evaluate your options in a more leisurely way.

You will know when there is a calling for you to become an entrepreneur. You will be unhappy with your job, your bosses irritates you, there is a burning desire that has just lighted up in your belly, a brilliant idea suddenly appeared and you feel that you are now ready to be an entrepreneur. Are you?

From experience, it takes a long time for an entrepreneur to make big fortune. If you do not have the patience, I recommend you a job that makes money faster than an entrepreneur.

Be a politician.

Source: Tan Thiam Hock, On Your Own/Starbizweek

The writer is an entrepreneur who hopes to share his experience and
insights with readers who want to take that giant leap into business but
are not sure if they should.

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Singapore layoffs bulk of high-skilled workers, households feeling the pinch

High-skilled workers make bulk of layoffs last year


Office workers at Raffles Place. TODAY file photo

HIGHER-skilled workers, degree holders and middle-aged workers were the hardest hit by layoffs in Singapore last year, making up more of the pool of resident workers made redundant than workers of other occupational, educational and age groups.

These groups were also less likely than other resident workers to be in employment within six months of being made redundant, Ministry of Manpower (MOM) statistics showed.

Of the Singaporeans and permanent residents who lost their jobs last year, more than seven in 10 (71%) were professionals, ­managers, executives and technicians, up from 66% the year before.

This was disproportionately higher than their 54% share of the resident workforce last year.

Between workers with different educational qualifications, degree holders made up the largest share – 44% – of residents who lost their jobs last year. This was up from 41% in 2014.

One in three of the resident workers made redundant last year was aged 40 to 49, despite this group making up only about one in four of the overall resident workforce.

Less than half of both degree holders and middle-aged workers who were made redundant in the third quarter of the year were back in employment by December.

Some workers could have decided to go for training or stop looking for a job, MOM said in its report.

But another reason could be that older workers already have preferences, such as not wanting to do shift work, said Linda Teo, country manager of human resource firm ManpowerGroup Singapore.

“This means they won’t be at the top of the list when employers sieve through applications.”

Adecco Singapore country manager Femke Hellemons said workers here often move from industry to industry for a comparative advantage, and skilled workers may take more time to find a job that they have the right skills for that also matches their pay expectations.

Losing a job would be a blow for those over 40 years old and with higher skills as they tend to have higher financial obligations such as mortgages and children’s study loans, but at the same time they are more costly to employers, said DBS economist Irvin Seah.

Overall, redundancies rose over the year while the number of vacancies fell, which experts said was because of weak global demand.

“This could be a sign of companies adopting measures to achieve cost efficiencies through outsourcing, offshoring and adoption of technologies in their work processes,” said Foo See Yang, vice-president and country general manager of Kelly Services Singapore.

ManpowerGroup’s Teo said the employment pattern is likely to continue its downward slide, as hiring intentions for the next three months are at their weakest since the third quarter of 2009. — The Straits Times/Asia News Network

Layoffs in S’pore last year highest since 2009 Global crisis

In what could be a sign of worse things to come, more workers lost their jobs last year amid weaker economic conditions, although unemployment remained low.

A total of 15,580 workers were laid off in 2015, the fifth consecutive year of rising redundancies, according to full- year official data released by the Manpower Ministry (MOM) yesterday.

Last year’s number climbed 20 per cent from 12,930 in 2014 and was the highest since the 2009 global financial crisis, which saw 23,430 workers laid off.

Job vacancies also fell to 53,700 as of December after accounting for seasonal variation, down 18 per cent from 65,500 a year earlier.

The trend could continue. “Amid the cyclical weakness and as the economy restructures, some consolidation and exit of businesses is expected,” MOM said.

Just over half, or 51 per cent, of the Singaporeans and permanent residents (PRs) made redundant from July to September last year were back in employment by the end of the year.

This figure measures the re-entry rates within six months of redundancy based on Central Provident Fund (CPF) records, and was down from 55 per cent three months earlier and 59 per cent at the end of 2014.

Still, the unemployment rate last year remained unchanged for Singaporeans, at 2.9 per cent. The figure including PRs was 2.8 per cent, up from 2.7 per cent in 2014.

There were 2,268,900 Singaporeans and PRs in jobs in Singapore as of the end of last year, just 700 more than there were a year earlier – when local employment had grown by 96,000.

With employment of foreigners also slowing, the total number of workers here stood at 3,656,200 at the end of last year.

For the year ahead, MOM expects redundancies to continue to rise in sectors facing weak external demand and that are undergoing restructuring, while domestic services sectors are likely to continue to need workers.

The Ministry added that it is “closely monitoring the current economic and labour market situation, and is strengthening employment support to help displaced locals re-enter employment”.

PMETs made up 71% of those affected as workers found it more difficult to get new jobs

SINGAPORE — The number of workers laid off last year spiked 20.5 per cent compared with 2014, reaching 15,580 — the highest number since the global financial crisis seven years ago, the latest Ministry of Manpower labour market report showed on Tuesday (March 15).

In 2009, the number of redundancies reached more than 23,000. The majority of last year’s lay-offs were in the services sector (55 per cent), where the financial services, wholesale trade and professional services were worst hit. Correspondingly, professionals, managers, executives and technicians (PMETs) made up 71 per cent of those laid off last year, up from 66 per cent in 2014.

 The financial services sector — which had been hit by news ofjob cuts announced by global banks, affecting employees here — shed

1,710 jobs last year, compared to 1,280 in 2014. Over the same period, the number of workers laid off in wholesale trade climbed from 1,490 to 2,150, while job losses for those in professional services — including doctors, lawyers and accountants — rose from 1,520 to 2,290.

Workers who were laid off also found it more difficult to get a new job last year: Based on Central Provident Fund records, half of the residents made redundant in the third quarter of last year managed to secure employment by December, down from 55 per cent in the previous quarter, and 59 per cent in the same period in 2014.

MOM said it expects redundancies to continue to rise in sectors facing weak external demand and those that are undergoing restructuring. Domestic-oriented services sector will continue to need workers, the ministry said. “MOM is closely monitoring the current economic and labour market situation, and is strengthening employment support to help displaced locals re-enter employment,” it added.

Economists told TODAY that the slower global economic growth and the downturns in manufacturing as well as the oil and gas sectors have had a spillover effect into the services sector.

DBS Bank senior economist Irvin Seah said the slump in oil prices not only affect oil rig builders but the entire supply chain including smaller companies that support the oil and gas sector. The financial services sector would continue to see more job losses compared to other segments as it is going through some consolidation, Mr Seah said. As far as the labour market is concerned, the worst is yet to come as the global economic outlook deteriorates, he cautioned.

CIMB Private Banking economist Song Seng Wun said that while lay-offs may not necessarily increase over the year with some sectors still hiring, the pace of hiring may slow and this could push the unemployment rate up. “I would expect job seekers to take even longer to find a new job in the year head. Businesses may not be laying off more workers but they may not be that in a hurry to hire,” Mr Song

Unemployment rate for residents was 2.8 per cent last year, inching up from 2.7 per cent in 2014, while that for citizens remained
unchanged at 2.9 per cent.

Mr Seah noted that the foreigners has borne the brunt of the job losses so far. “Companies are unwilling to let go of local workers because of the low foreign worker dependency ratio ceiling,” he said.

On the high proportion of PMETs laid off last year, Members of Parliament (MPs) from the labour movement attributed it to the fact that this group of workers comprise a higher percentage of the total workforce. Still, NTUC assistant secretary-general Patrick Tay, who is also an MP for West Coast GRC, said he was particularly concerned about PMETs above 40 years old, who would have a harder time finding a new job if they are retrenched.

Mr Tay, who co-chairs the Financial Sector Tripartite Committee which helps professionals seeking to find new jobs in the sector, suggested adopting a sectoral approach to provide more targeted and focused help in sectors where affected by high job losses.

Last month, the Association of Banks in Singapore announced that it has initiated a jobs portal that allows its members to refer their staff for suitable positions in other banks.

NTUC director of youth development Desmond Choo, who is an MP for Tampines GRC, said more efforts are needed to help PMETs. “We need to be able to re-skill, re-tool them (to join) other growing sectors … like healthcare and ICT (information communication technology),” said Mr Choo. More could also be done to provide “hardship support” for the families of retrenched PMETs while
they look for a job, he added.

Advanced data released by MOM in January showed that Singapore saw its worst year-on-year employment growth since 2003 last year.

Confirming the labour market’s sluggish performance, the latest MOM report said that excluding foreign domestic workers, total employment grew by 23,300 – or 0.7 per cent – last year, compared to increases of 122,100 (3.7 per cent) and 131,300 (4.2 per cent) in 2014 and 2013, respectively.

The growth in local employment was flat: Only 700 of the jobs added were filled last year by Singaporeans and Permanent Residents, compared to 96,000 and 82,900 in 2014 and 2013 respectively.

6,534 jobs lost in Malaysia since start of 2016, now is not the time to be choosy !

About 78% of jobs lost come from finance, insurance sectors

PETALING JAYA: A total of 6,534 workers from 114 companies have lost their jobs since the start of the year, with 5,118 or about 78% coming from the finance and insurance sectors.

The number, which is more than a sixth of the 38,499 workers retrenched last year, reflect the current economic downturn and challenging business climate.

The Labour Department, a unit under the Human Resources Ministry told theSun today it had received 115 retrenchment notifications from local employers since early this year until March 10.

It is a legal duty for employers to notify the department of every retrenchment activity.

The five top sectors involved in the exercise are manufacturing (22 notifications), mining and quarry (21 notifications), retail (13 notifications), construction (11 notifications), as well as finance and insurance (7 notifications) sectors.

In the manufacturing sector, about 437 workers were retrenched during the period, followed by 395 workers in the mining and quarry sector, 184 workers in retail sector and 155 workers in the construction sector.

The department added that it had received a total of 13 notifications from oil and gas sector (mining and quarry), which has affected 241 workers in total to date.

The department also revealed that professional and administration workers accounted the majority of workers affected, representing 72% or 4,720 of the total, while the remaining 28% or 1,814 were clerical workers and below.

Commenting on retrenchment laws and benefits, the department said although retrenchment is a managerial prerogative and there is no legal provision to prohibit any company from cutting their workforce, there are salient points within employment related regulations that sets conditions when an employer conducts a retrenchment exercise.

For instance, Section 60N of the Employment Act 1955 states that foreign workers should be the first to go in a staff reduction exercise.

Meanwhile, Regulation 6 states that employers are obligated to pay lay-off benefits based on the following conditions:

  • » 10 days wages for each year of service, for those with one to two years of service:
  • » 15 days wages for each year of service, for those with more than two years but less than five years service; and
  • » 20 days of wages for each year of service, for those with more than five years of service.

Employees not covered by the Employment Act 1955 may seek redress for possible remedy under the Industrial Relations Act 1967 if they are not paid any lay-off benefits.

The Labour department said the government facilitates retrenched workers who are seeking employment through an online portal services JobsMalaysia and its nationwide network of JobsMalaysia centres, which operate under the purview of the unit.

“In addition, the department through JobsMalaysia also conducts regular job/employment carnivals that aim to promote potential job vacancies for Malaysians including those affected through recent retrenchments,” it added.

Wan Ilaika Mohd Zakaria

Now is not the time to be choosy


Times are tough, jobs are hard to come by and more and more are flooding the job market as companies fold and lay off staff. For Malaysians, it’s times to wake up and realize this means hard, even dirty, work.


What we need now iss the creation of jobs – a shot in the arm for the economy – and for Malaysians to understand that they have to get down and dirty before they can make a success of life.

THE old woman roams the back streets off Old Klang Road. With her slightly hunched body, and a smile on her face, she rummages through the dustbins in the alleys, digging into the bins with her stick.

She does dirty work, but she stays clean. She uses the sharp end of the stick to pick up the aluminium cans and plastic bottles. Her hands are only for cardboard and pieces of clean paper.

We call her Latha, for want of a name. She’s a Malaysian Chinese, from Klang.

Unlike some people’s stereotyped Chinese, she works hard, she puts in long hours and she makes just enough money to be comfor­table – by her standards. Thus, the smile on her wrinkled face.

But not all can do that.

The story of S. Sellamah is one such. She was desperate to feed her child. And she stole a 2kg packet of Milo. She was caught, fined and jailed. Now, she is on record as an ex-convict and lawyers are trying to get that jail sentence expunged. It doesn’t seem right that someone who stole so little out of desperation should have to live life with a record like that hanging over her head.

After all, I believe the guys in Milo would be happy to give her a carton of the stuff. They are people with big hearts. I know.

Over in Penang, a man also stole fruits and drinks, again to feed his children. His wife was in a coma and he had no money. He was caught, too.

But his story is one that warms the heart. The general manager of the hypermarket took pity on him, checked out his story and offered him a job instead. Now, the man has a job and his children can have decent meals. Isn’t that a wonderful ending to a sad story?

We are living in times of hardship. Prices are soaring. Jobs are getting scarce. Those with jobs are just happy to hang on to them. Companies are folding.

So many people have lost their jobs. Many are not even getting compensation for the jobs they lost. One media company actually told retrenched employees to go to court to get their compensation.

According to a report, more than 6,500 people have been let go from their jobs just this year. That’s only the tip of the iceberg. Even Petronas is letting go of 1,000 employees.

And we are barely three months into 2016. Things are likely to get worse, far worse, be­fore they get any better. So, it would do to have a heart and spare a thought for the jobless.

Yes, there are thieves who would steal at the first chance – which is why many supermarkets lock up items like Milo tins – but if the cases are genuine, surely having a heart for the poor can’t be a bad thing.

Talking of the jobless, a bunch of schoolmates from Penang are now embarking on a plan to help them. They are setting up a portal for odd jobs. They call it dojob. The idea behind it is that people need cash in hand for immediate spending.

No CVs, no interviews. You need a waiter for the party you are having? You may be able to find someone there. A gardener to cut the overgrown grass? Someone with basic know­ledge of plumbing to fix a leaky pipe? Stuff like that.

I think it’s a great idea. And what’s more. It’s free. It’s just a platform to get a hirer and hiree to meet up.

Of course, there are questions to be answered – like how would people without jobs be able to access the internet to look for these jobs? But that’s for those guys to figure out.

But the aim is noble. It could help people like the two desperate shoplifters to find some quick cash and tide things over until a proper job comes along.

With Malaysians now des­­perately in need of jobs, it’s a good thing that the 1.5 million Bangladeshi worker deal is off. To have foreigners take away the few jobs will only make things worse, not to mention the almost RM30bil that’s sent back to their homes.

What we need now is the creation of jobs – a shot in the arm for the economy – and for Malaysians to understand that they have to get down and dirty before they can make a success of life. For most of us, our forefathers did just that.

There are many Bangladeshis who are now running their own motor repair shops and car washes. They started as lowly-paid wor­kers and now are employers to Malaysians! It’s time for Malaysians to wake up. Times are hard – and that calls for hard work.

By Dorairaj Nadason The Star

The writer, who can be reached at raj@the knows all about hard work. When The Star was shut down in 1987, he had to be a carpenter’s assistant, lugging lumber up five floors. No lifts, just the stairs.
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Job cuts: rightsizing the oil and gas industry

THE slide in global crude oil prices has left a trail of casualties in its wake.

Oil companies and governments that rely on the price of crude oil for profit and revenue have been hurt by plunging receipts from lower crude oil prices.

For countries dependent on commodities such as crude oil, the effect cuts deeper. Their currencies have felt the brunt from the weaker crude oil prices and it is this group of countries that have a reliance on commodities that have seen the biggest depreciation against the US dollar compared with oil importing countries.

While the macro picture hogs the headlines and generates most of the chatter, the real micro cost of plunging crude oil prices has been felt by employment in the sector.

Many oil majors have announced job cuts to manage costs that had spiralled upwards during the boom days in the industry. Oil majors now have resorted to slashing their workforce amid the biggest downturn in the industry for decades.

For Malaysia, that impact is telling. Between January and July, the Malaysian labour market has laid off 6,547 people (not inclusive the voluntary separation schemes for Malaysia Airlines and banks). But 30% of that number, or nearly 2,000 people who lost their jobs, have come from the oil and gas industry alone.

“It is getting worse,” an oil industry executive says on the job cuts plaguing the industry. He says the oil major he works for is in the midst of a rightsizing exercise and that will mean many jobs will need to be slashed in the coming months.

“We have to reach a new equilibrium for the economies in the oil and gas sector.”

And it does not seem like the industry has hit a trough when it comes to retrenchment.

Part of that is down to the outlook for the price of crude oil. Although there is optimism that prices have hit a bottom, there is another school of thought that predicts more pain for the sector.

Supply from shale oil and future Iranian oil, once trade sanctions are lifted, are clouding the supply dynamics for crude oil and gas.

With expectation that oil prices will remain weak for the foreseeable future, oil majors continue to announce job layoffs. More jobs are expected to be cut next year.

In the US alone, oil companies are reported to have laid off more than 86,000 personnel from June last year up to September of this year. With many global giants having a presence in Malaysia, the workforce in the country will likely be included as part of a global cut in workforce.

Poor profit

The main culprit for job cuts among oil and gas has been the financial performance of those companies. As profits plunge, the knee-jerk reaction is to cut costs, and employment is in the crosshair of such cuts.

The hit on leaner employment prospects has already been told through not only the fall in crude oil prices but also cuts in capital expenditure and operating expenditure by Petronas Nasional Bhd. Companies that service the upstream segment of the industry have been the worst hit.

Downsizing: The main culprit for job cuts among oil and gas has been the financial performance of O&G companies. As profits plunge, the knee-jerk reaction is to cut costs, and employment is in the crosshair of such cuts. — EPA
Downsizing: The main culprit for job cuts among oil and gas has been the financial performance of O&G companies. As profits plunge, the knee-jerk reaction is to cut costs, and employment is in the crosshair of such cuts. — EPA

Petronas, the driver of the local oil and gas industry, has cut its operating costs and that has meant lesser demand for services provided by the oil and gas industry.

An industry official says Petronas, for its part, is not retrenching employees at the moment despite pressure to maintain profitability. It will cut bonuses in order to keep its permanent staff.

“There is no rightsizing of permanent staff at Petronas but whether it renews the contracts of high-paying employees is another thing,” he says.

The hardest hit segment on the industry’s value chain has been upstream activity. The cut in the number of exploration rigs and the associated services indicates the predicament the industry is going through.

The collapse in the price of crude oil has meant that companies are less inclined to spend on searching for new sources of crude oil. It makes matters worse when it is already costly to search for such oil in areas such as deepwater oil fields.

“As revenue comes down, staff are being redeployed from upstream to downstream. Staff will also be asked to multi-task but whether they can do that is another thing,” he says.

A pickup in hiring activity in the upstream segment is not expected as long as crude oil prices are anaemic.

Job cuts have taken place in that segment as a result of dimmed prospects in the industry.

With prices not expected to bounce up significantly, job prospects will remain dim. The general consensus is that crude oil prices are expected to remain sluggish for the short- to medium-term and that has necessitated the cut in expenditure and staff costs.

Trickle down effects

The oil and gas sector is not the only segment that has laid off workers as the pace of retrenchments seemed to have picked up pace.

Maybank Investment Bank says in a report that retrenchments rose sharply in the second quarter, up 56.7% year-on-year to 3,213 in the second quarter compared with a 14.4% increase to 2,789 in the first quarter of this year.

“Retrenchments in the construction sector went up as a number of major projects are nearing completion amid slow replenishment rate. The oil and gas sector’s retrenchment has been on the uptrend since the second half of 2014, coinciding with the plunge in crude oil price.

“At the same time, services industries like ‘finance, insurance, real & business services’ and ‘transport, storage & communications’ also showed uptrends,” it says.

Between January and July of this year, statistics indicate that 47% of retrenched workers are skilled, 40% semi-skilled and 13% unskilled.

It is the loss of skilled jobs, such as that by the oil and gas sector, that will have a big knock-on effect on the rest of the economy. The higher than average salaries that those workers once commanded will evaporate from the system and the absence of which will trickle down to the different sectors of the economy.

The slump in the industry has already been felt in the areas surrounding KL City Centre (KLCC), which is said to be the operational hub for oil and gas companies in Malaysia.

Hotel occupancy is down in Kuala Lumpur, especially those around KLCC. The Kuala Lumpur Shangri-la, which is the benchmark for hoteliers in the country, has announced a 10% drop in revenue in the second quarter of this year.

Apart from hotels, rental demand for houses surrounding the KLCC area has been acutely felt with the loss of jobs in the oil and gas industry.

“There has been a knee-jerk reaction especially around the KLCC area,” says a property consultant.

He says tenancies have been cancelled with oil and gas workers retrenched and for those who still have their jobs, their employers are housing them in different areas in the city.

“The numbers are down but it is not significant. There has, however, been a downgrade in the choice of accommodation,” he says.

The outlook though is not going to be rosy. With gross domestic product clocking a growth rate of 4.9% in the second quarter compared with growth of 5.6% in the first quarter, the slower growth rate will eventually bite into the prospects of employment.

“The labour market lags economic activity. There will be a lag of one or two quarters as companies won’t immediately lay off workers,” says an official.


Fewer job vacancies due to wait-and-see attitude.

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..


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