Layoffs of up to 30% coming, FMM survey shows

A survey of manufacturing companies has shown that layoffs and other cost-cutting measures can be expected in the next six months.

PETALING JAYA: With some companies suffering a drop in revenue of up to 50%, cost-cutting measures such as layoffs, furloughs (unpaid leave) and job freezes may be expected in the next three to six months, according to a survey by the Federation of Malaysian Manufacturers.

FMM president Soh Thian Lai said manufacturers were under “tremendous strain” because of the national shutdown of public activities to stop the spread of Covid-19. More than half of the companies surveyed said their revenue had dropped by more than 50%.

“The impact on some companies is greater than others and some might have to resort to lay-offs or retrenchments,” he said in a statement today. Some 63% of companies said cost-cutting measures may be needed, 47% expect to do so in the next three to six months.

He said 67% of respondents said they would carry out a jobs freeze, while 59% were considering instituting unpaid leave for their employees.

Other measures include the removal of some non-contractual allowances or benefits (59%), compulsory annual leave (59%), reduction of work days per week (39%) and cutback of work hours per day (29%).

More than three-quarters (78.7%) of firms said they might have to lay off up to 30% of their workforce, he added.

The survey was conducted from April 6 to 10 among 419 different companies mostly in manufacturing.

Soh said the wage subsidy programme announced by Putrajaya was welcomed by companies, although stressing that negotiations with workers on their terms of employment during the MCO will not be easy.

He said 74% of those surveyed felt that the subsidy was inadequate to help them retain workers without employing any pay-cuts or lay-offs in the next three to six months.

He called on Putrajaya to extend the programme to all wage-levels and to extend it to a minimum of six months.

Soh also urged the government to implement an exemption or reduction of Employees’ Provident Fund contributions until December and to waive the Year of Assessment 2020 income tax for all companies.

He suggested the government also suspend levies for foreign workers for one year and to fix personal income tax at 10% at most.