KUALA LUMPUR: Due to the Covid-19 pandemic, job losses in the country have increased by 42% year-on-year for this first quarter (Q1 2020), according to the Social Security Organisation’s (Socso) Employment Insurance System (EIS).
In its report, EIS said the pandemic had impacted many businesses. They experienced a drop in demand of 37% and 42% were unable to operate as usual.
“This trend is only expected to accelerate from April 2020 onwards, with job losses increasing by 50% to 200% year-on-year for each subsequent quarter in 2020,” it said in the report published today.
In addition, the unemployment rate is forecast to hit 4% in 2020 compared to 3.2% during the 1997 Asian financial crisis and 3.7% during the Great Recession in 2018.
Meanwhile, the retrenchment figures are expected to be similar to those during the 1997 Asian financial crisis due to pre-emptive measures of Employment Retention Programme (ERP) and Wage Subsidy Programme (PSU) taken by the government to prevent mass lay-offs.
“The youth unemployment rate has remained mostly steady at 8-11%. However, they are the age demographic most vulnerable to retrenchment.
“Data shows that 61% of job losses are among workers aged 40 and below, with 31 to 40-year-olds accounting for 32% and workers under 30 making up the rest at 29%.
“Male workers are more likely to be retrenched than female counterparts at 60% male to 40% female. This may simply reflect the fact that there are more men than women in the workforce,” it said.
The report states, out of 7.5 million active employees registered with Socso in 2019, 1.458 million worked in a tourism-related sector, while 1.457 million worked in manufacturing.
“It should be no surprise then that over half of business closures occurred among large employers of over 200 workers in the tourism sector, while the manufacturing sector retrenched the most workers at 23% of the total to reduce overhead costs after being forced to shut their factories,” it said.
Employers who have yet to retrench staff are embarking on cost-cutting measures nonetheless.
“One of the most popular methods is to reduce salary, especially for employees who have been employed for more than five years as their salaries are typically 45% higher than those of shorter-tenured employees,” it said.
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