This article first appeared in The Edge Malaysia Weekly, on October 26 - November 1, 2015.

THE string of retrenchments that companies big and small have announced since early this year was conspicuously absent from the Economic Report 2015/16’s list of problems faced by the country’s labour force.

The government is targeting the unemployment rate to fall to 2.9% next year, although it crept up to 3.2% in July — a 10-basis-point increase from a month earlier.

In the 11th Malaysia Plan, the labour force participation rate — the percentage of employees and active job seekers among the working-age population — is to rise to 70.1% from 67.5% in 2014. Apart from that, the five-year plan wants productivity growth of 3.7% and the unemployment rate to fall to 2.8%.

The labour force is facing issues of low productivity, inadequate quality workforce and creation of quality jobs, and high youth unemployment, accounting for 57.5% of the unemployed workforce in 2013, the report says.

Other issues include the low female labour force participation, continued dependency on low-skilled foreign workers, and declining fertility rates.

To increase labour count and quality, the government has launched initiatives such as mainstreaming technical and vocational education, and developing bumiputera human capital and small-medium enterprises (SME).

Male participation in the workforce reached 80.6% as at the first half of this year. However, there were only 53.8% of women of working age in the labour force, even though six out of 10 public university graduates are women.

“The greater inclusion of women talent in the workforce will contribute to realising their potential, raising family income, and improving business performance,” the report says.

Realising women are “the drivers of economic growth”, the government has introduced measures to bolster their presence in the workforce. These include enhancing job creation in the services sector, developing women entrepreneurs, promoting flexible work arrangements, and providing grants to employers who manage to recruit and retain women keen to return to work after a career break.

Although the government has come out with many initiatives to spur employment, can businesses heed the government’s call, at least, in the short term? Recent news about major corporations such as Hong Leong Bank Bhd, RHB Capital Bhd, and Shell Malaysia offering pink slips to their employees doesn’t paint a vibrant picture of the job market.

It remains to be seen whether these future retrenchments will cause the unemployment rate to climb.

The Economic Report pointed out that retrenchment between January and August fell by 10.3% year-on-year to 13,403 people. Fifty percent of retrenched workers were from the services sector ­— the sector the government recommends that women enter because it is less demanding physically. Another 44.2% came from the manufacturing sector.

The reason for these retrenchments was “the closure of some businesses and downsizing of workforce by employers”, the report says. On the bright side, 9,017 people were hired in the services sector from January to August — more than the total job cuts in the sector during that period.

But highly-skilled jobs remained flat last year, making up 25.2% of the workforce. “About 553,000 workers employed in the semi-skilled category had a diploma or higher qualifications, indicating insufficient creation of skilled jobs,” the report says.

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