LETTER | Can unemployment be overcome as Covid-19 cases increase?

LETTER | The case of Covid-19 has begun to show alarming figures in Malaysia. After a long time, Covid-19 cases did not exceed two digits, but since August the number of new cases has reached three digits.

If it is true that the new wave in the rise of the Covid-19 case, of course, it will affect the economic position of the country which is currently in the recovery phase.

Based on the statement by Prime Minister Muhyiddin Yassin, the country's gross domestic product (GDP) growth showed progress when it recorded growth to a negative 3.2 percent in June compared to a negative 28.6 percent in April 2020.

In addition, the country's economic recovery can be seen with a decline, the unemployment rate to 4.7 percent or 745,100 unemployed in July 2020, a decrease of 28,000 unemployed compared to June. In fact, this figure is among the lowest when compared to the unemployment rate in May 2020 which recorded 5.3 percent.

Wage Subsidy Programme (WSP) allocated by the government of RM16.8 billion in the National Economic Regeneration Plan (Generator), included retention, recruitment, and training assistance incentives for workers. Reportedly, WSP has saved almost 2.4 million jobs until June 26, 2020. 

The government has continued WSP 2.0 from Oct 1 to Dec 31, 2020, with an allocation of RM2.4 billion to save 1.3 million jobs by maintaining the same method as the previous WSP.

Although the economy and employment are expected to recover, the World Bank expects to have a negative GDP growth forecast of 4.9 percent compared to a negative 3.1 percent this year.

The fact is, the country's unemployment rate today is still high. It is quite difficult for Malaysia to return to relatively stable unemployment figures, in the range of 3.2 percent to 3.3 percent, before the Covid-19 pandemic spread. There are several things that can cause this unemployment rate to increase.

First, the number of local workers who have lost their jobs in Singapore is increasing. According to the Labour Attaché, the Malaysian Energy Commission in Singapore, the total number of Malaysian workers terminated for the period of January - July 2020 is 15,666. Of this number, almost 60 percent of Malaysian workers are laid off in the services sector.

The number of unemployed will increase to 100,000 people if the opening of the Johor - Singapore border is delayed longer. This situation will also increase the unemployment rate in Johor which has increased to 18 percent or 35,000 people.

Second, the difficulty of graduates getting job opportunities. The 2019 Graduate Tracking Report found that 41,161 graduates found it difficult to get a job after six months of graduation. The total unemployment of these graduates is expected to increase by more than 100,000 graduates as 75,000 graduates this year find it difficult to get jobs due to Covid-19.

Third, the WSP allocation is still insufficient for the long term. The rate of WSP in Malaysia is too small, about 12 percent of the monthly salary compared to WSP in Singapore, more than 50 percent. The low rate of WSP allocation will cause more than 300,000 small and medium enterprises (SMEs) to go bankrupt.

If the Covid-19 case continues to rise and there is no extraordinary action from the government to resolve employment issues, more people will lose their jobs and income. This expectation is in line with data from the Finance Ministry which estimates that two million jobs will be at risk by the end of 2020.

We will see an increase in unemployment based on work experience and skills, especially abroad. With the slowing economic growth due to Covid-19, the government needs to do something "extraordinary" beyond saving jobs alone.

The direction to create a decent job should be the main agenda of the government today. Effective job creation means upgrading basic skilled and low-paying jobs with added value with higher productivity, apart from the policy of creating jobs in new industries.

To add value in low-skilled jobs, especially 3D (dirty, dangerous, difficult), the use of technology and automation needs to be intensified. This means automation rearranges the true meaning of the job using new methods.

For example, Malaysia can reduce the number of foreign workers as security guards with the use of CCTV that can be controlled by a Malaysian citizen guard. The use of machinery and technology in the commodity and plantation industries can reduce the number of foreign workers.

The reality is, Covid-19 is capable of being a game-changer to the new narrative of 3D work.

However, this policy is given less specific focus as the Human Resources Ministry has allowed employers to hire foreign workers who have been laid off if the jobs are not filled by locals.

If the government and the private sector are committed to structuring 3D jobs with a fair wage rate, the local community, especially young people, it will attract this group of workers to fill the job market in Malaysia with a fair wage.

Without a commitment from the government and industry, of course, efforts to provide employment to the people during Covid-19 is not feasible and it's unusual to see our country's economic system still depends on low wages and foreign labour even though there are opportunities to improve the situation.

The writer is the research coordinator for Research for Social Advancement (REFSA).

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.