April 7, 2009

The RM1 solution to job losses

That RM1 may not buy a glass of teh tarik but it could go a long way to help those laid off.

AmResearch economist Manokaran Mottain has suggested raising RM11 million for a retrenchment fund if every worker in Malaysia gives RM1.

"The government could match the amount with another RM11 million," he said in a report.

The fund would be similar to the S$20 million (S$1 = RM2.37) fund being considered by the labour movement in Singapore with the help of its cooperatives, affiliated unions and unionised companies.

It could help the jobless in the short term, say up to six months, and this could be used to cover utility bills or children's school expenses.

The government plans to create 163,000 training and job placement opportunities in the public and private sectors as announced under its mini-Budget on March 10.

AmResearch argues that the mini-Budget is not enough and it proposed a third stimulus of RM15 billion by September. The government said the economy could expand or shrink by 1 per cent this year but Manokaran thinks the fall could double. In its worst case scenario, the gross domestic product, the sum total of goods and services, could fall by 4.5 per cent.

Factories in Malaysia have been hit hard by weak demand for the country's key technology exports.

"Given larger losses in export earnings and weakening consumer and business confidence amid rising unemployment following closures of manufacturing concerns and increasing voluntary separation schemes in the financial industry, we maintain our view that private sector demand, especially private consumer spending, will remain weak for next couple of years."

Since October 2008, 25,000 workers have been retrenched, 30,900 temporarily laid off, 23,900 had pay cuts, and 100,000 were not given overtime.

As orders continue to fall, retrenchment for 2009 alone could easily exceed 100,000 (including temporary layoffs and termination of contract workers).

In January, 15,000 jobs were lost in Malaysia, mostly in the electronics industry.

Last month, Flextronics International, one of the world's largest contract manufacturers, shut down an assembly plant in Shah Alam and laid off 1,382 workers.

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