60% of Malaysian workers will struggle to survive beyond a week of unemployment, says MTEM senior fellow

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KUALA LUMPUR (May 24): About 60% of Malaysian workers will find it very challenging to survive for more than one week, let alone raise even RM1,000 in household expenses, if they suddenly lost their jobs due to the Covid-19 pandemic.

This is based on a study by Bank Negara Malaysia (BNM) and the National Economic Action Council in 2017, which found that up to 60% of Malaysian households were surviving off less than the living wage, meaning they did not earn enough to have a normal standard of living, said Majlis Tindakan Ekonomi Melayu (MTEM) senior fellow Azlan Awang.

“The current Covid-19 crisis has exposed this major weakness in our society, [therefore] confirming the findings of the study. It also showed that [most] workers have enough money for only a week if they lose their jobs overnight, the criteria for the vulnerability classification,” he said during a webinar organised by the Malaysian Trades Union Congress (MTUC) titled “Challenges facing workers in the Covid-19 pandemic” yesterday.

The central bank released its living wage concept in March 2018, which ranged from RM2,700 per month for a singleton living in Kuala Lumpur, to RM6,500 for a couple with two children, based on 2016 living estimates.

After the release of its 2017 study, BNM categorised 75% of Malaysia’s workforce as belonging to the country’s most vulnerable group, and it is this group of workers who are currently the most affected by the economic crisis caused by the pandemic, added Azlan.

“Malaysian workers generally have very low purchasing power. This is the reason why they cannot cope with rising cost of living, especially in moments like this pandemic,” he said.

Even prior to the massive Covid-19 outbreak, Malaysia’s wages were “something we cannot be proud of”, said Azlan, adding that the wage share of gross domestic product (GDP) was only 35% with a median amount of RM2,300 a month.

He said the impact of Covid-19 had revealed that the Malaysian economy was actually very fragile.

“I hope the findings will not be made as a statement of fact over the next few months when the impact of Covid-19 bites in further. From this experience, the MTEM feels the government has to reset the business and economic sectors to make them more worker-friendly and resilient enough to face situations similar to Covid-19 or even worse.

“We need to strike a balance and not focus on business and economic growth per se.  We must have a system in place which will be more sustainable,” he said.

Meanwhile, he pointed out that only RM2.2 billion or 16% of the RM13.8 billion set aside under the Social Security Organisation's (Socso) Employment Insurance Scheme (EIS) had been approved to subsidise the wages of two million workers employed by 267,752 employers. 

He attributed this to a number of factors, namely that some employers could still be in the midst of applying for the subsidies, while others may not have the necessary documents.

However, some employers may also feel dissuaded by the caveat that they cannot retrench their workers for six months after receiving the wage subsidies.

Azlan also pointed out that underemployment was a major problem in the Malaysian workforce as they were likely not working the minimum 120 hours per month to qualify for full employment.

He said this could mean that the unemployment rate was higher than the data presented by the authorities and urged that they disclose the real figures so that the relevant parties can draw up suitable policies for existing and incoming participants of the job market.

Meanwhile, labour lawyer Arun Kumar, also a panellist on the webinar, said government officers should be given more powers to deal with errant employers who take the subsidies but ignore the caveat and retrench workers within six months.

“This wage subsidy scheme was not drawn up from any laws or legislation passed by Parliament, unlike some other countries which enacted specific Covid-19 laws before disbursing aid packages with specified (and legally binding) conditions.

“As things stand, there may be impediments for the Malaysian government to act against employers if they lay off workers after receiving the aid. Under the existing labour laws, employers only need to notify the Labour Department if they want to retrench workers,” he said.

He said the department must investigate and verify the claims of firms requesting to lay off workers.

“The onus is on the firms to prove their losses. For this [government] officers must be given more powers so that the laws can have more bite,” he said.