Malaysia needs better infrastruchure

 

Matsuda said one way Malaysia can become more resilient in times of trouble is to ensure equal basic infrastructure for all, which includes efficiency in government assistance as well as making information more accessible.

“There is definitely room for improvement in terms of transparency and the dissemination of cash transfers. The cash transfers were a good idea but leakages and wastage did take place,”

- Yasuhiko Matsuda

Digital divide results in poor people having no access to government assistance during Covid-19

KUALA LUMPUR: Malaysia needs a stronger infrastructure in place in order to mitigate any future crises that may arise and impacting its people and economy, says World Bank country manager for Malaysia, Yasuhiko Matsuda.

Matsuda said while the majority of people suffered during the Covid-19 pandemic, smaller businesses and vulnerable households were impacted more, partly because they had little or no access to government assistance.

“One main reason was because of the digital divide. Poorer people had no Internet and so they didn’t have the information they needed to apply for these forms of assistance,” he said.

He was speaking to reporters during the “Building Malaysia’s Resilience, Lessons from Covid-19 Economic Impact and Policy Responses” conference by the World Bank Group yesterday.

Although nearly 80% of low-income households (monthly earnings of RM2,000 and below) received government assistance, about one-fourth of them did not have access to cash assistance.

More than one-third of households earning more than RM10,000 received the cash assistance.

According to Matsuda, one way Malaysia can become more resilient in times of trouble is to ensure equal basic infrastructure for all, which includes efficiency in government assistance as well as making information more accessible.

“There is definitely room for improvement in terms of transparency and the dissemination of cash transfers. The cash transfers were a good idea but leakages and wastage did take place,” he said.

Matsuda said one challenge that arose in terms of the cash assistance benefit was that while the government managed to cover a somewhat large population, it only managed to give each family a small amount.

He said despite the good intentions, the impact was rendered limited and this showed in the surveys done post-pandemic.

“Moving forward, the government can look at maybe a lesser number of families but provide them with a higher amount of assistance so it is more impactful,” he said.

For the middle class, the government can look into areas of employment or provide people with a mix of different things to try out, especially in this era of digitilisation, he said.

He added that the Madani Economy framework announced this year by Prime Minister Datuk Seri Anwar Ibrahim covers these aspects as the government pledges to work towards realising them.

“A strong economy must go alongside a strong fiscal capacity. Now the key will be how it is implemented,” he noted.

Similarly, World Bank senior economist Ririn Purnamasari said the reality of the “caring effect” of the pandemic recorded some struggling to catch up despite Malaysia’s economy being revived.

“We risk widening the equality gap now and in the future, and as we’ve seen in the report, some sold their assets as a coping method which were meant to generate income,” she said.

The other strategies that could be scarring for people included decreasing essential food expenditure, borrowing from friends and family, and taking children out of school.

While not so evident in Malaysia, it was recorded in countries like Cambodia and the Philippines.

Additionally, Purnamasari said Malaysia needs to be aware of its fiscal capacity and resources, and how it can best help those that need it, while strengthening the economy together.

On top of that, the government should continue collaborating with other relevant bodies to offer labour market programmes for the community.

“One way we will see people moving forward is by upskilling and reskilling them. This will empower them and give them the ability to participate in different fields so it becomes more sustainable for them,” Purnamasari said.

Currently, Malaysia’s labour market is relatively underdeveloped with limited accessibility for workers in the informal sector.

“Integration of programmes across ministries and agencies and increased shock responsiveness can strengthen labour market policies.

“Hiring incentives should be balanced with well-designed training programmes to address skills mismatches,” she said.

Meanwhile, World Bank Group in its latest report noted that Malaysia emerged as a country with strong resilience and plenty of potential for recovery from the pandemic.

The six other countries surveyed for this report included Vietnam, Malaysia, Indonesia, Mongolia, Cambodia and the Philippines.

Notably, Malaysia’s diversified exports and strong trade sector contributed to its economic resilience during the pandemic-induced recession.

“Malaysia’s favourable business environment, ranked highest among the six countries studied according to the World Economic Forum’s Global Competitiveness Index, enabled Malaysian firms to effectively navigate disruptions caused by the pandemic and capitalise on opportunities during the recovery,” the report said.

Among the key takeaways from the report was that the younger, less-educated and informal workers were more negatively affected than the white-collared professionals.

“Self-employed workers or those working for family businesses were more likely than wage workers to experience work stoppages and income loss.

“However, the survey showed businesses that were shedding workers became less productive,” the report said.

Women were also reportedly more susceptible to losing their jobs than men, especially those with a lower income, lower education and who were younger.

The report also showed that digitilisation became the go-to once the pandemic hit and movements were heavily restricted.

“The acceleration of technology adoption created an opportunity for firms and workers to be more productive.

“However, the digital divide was apparent in poorer regions with a lower share of workers working from home,” it said.

Lastly, the report said Malaysia had relied heavily on support to businesses in the form of liquidity, credit and lending below-the-line measures as opposed to providing direct support to households.

While countries like Cambodia, Mongolia and Indonesia recorded higher support for households, Malaysia saw a more thorough level of support for businesses.

“The support to businesses appeared to be more biased towards more productive and larger firms. While the support to households was pro-poor, it was not as responsive to shocks,” it said.

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https://www.nst.com.my › news › nation › 2022/01

South Korea's latest big export: Jobless college graduates

South Korea's latest big export: Jobless college graduates - Reuters

Left: A jobseeker stands as he gets into the 2018 Japan Job Fair in Seoul, South Korea. Jobseekers attend the 2018 Japan Job Fair in Seoul, South Korea. (Filepics)

SEOUL: Cho Min-kyong boasts an engineering degree from one of South Korea's top universities, a school design award and a near-perfect score in her English proficiency test.

But she had all but given up hope of finding a job when all her 10 applications, including one to Hyundai Motor Co, were rejected in 2016.

Help came unexpectedly from neighboring Japan six months later: Cho got job offers from Nissan Motor Co and two other Japanese companies after a job fair hosted by the South Korean government to match the country's skilled labor with overseas employers.

"It's not that I wasn't good enough. There are just too many job seekers like me, that's why everyone just fails," said the 27-year-old, who now works in Atsugi, an hour southwest of Tokyo, as a car seat engineer for Nissan.

"There are numerous more opportunities outside Korea."

Facing an unprecedented job crunch at home, many young South Koreans are now signing up for government-sponsored programs designed to find overseas positions for a growing number of jobless college graduates in Asia's fourth largest economy.

State-run programs such as K-move, rolled out to connect young Koreans to "quality jobs" in 70 countries, found overseas jobs for 5,783 graduates last year, more than triple the number in 2013, its first year.

(Graphic: Korea's young talents going abroad png - https://tmsnrt.rs/2LwlSUU)

Almost one-third went to Japan, which is undergoing a historic labor shortage with unemployment at a 26-year low, while a quarter went to the United States, where the jobless rate dropped to the lowest in nearly half a century in April.

There are no strings attached. Unlike similar programs in places such as Singapore that come with an obligation to return and work for the government for up to six years, attendees of South Korea's programs are neither required to return, nor work for the state in the future.

"Brain drain isn't the government's immediate worry. Rather, it's more urgent to prevent them from sliding into poverty" even if it means pushing them abroad, said Kim Chul-ju, deputy dean at the Asian Development Bank Institute.

In 2018, South Korea generated the smallest number of jobs since the global financial crisis, only 97,000.

Nearly one in five young Koreans was out of work as of 2013, higher than the average 16 percent among the member countries of the Organization for Economic Cooperation and Development.

In March, one in every four Koreans in the 15-29 age group was not employed either by choice or due to the lack of jobs, according to government data.

(Graphic: S.Koreans landing overseas jobs by country 2018 png - https://tmsnrt.rs/2DZCTR9)

LABOR MISMATCH

While India and other countries face similar challenges in creating jobs for skilled labor, the dominance of family-run conglomerates known as chaebol makes South Korea uniquely vulnerable.

The top 10 conglomerates including world-class brands such as Samsung and Hyundai, make up half of South Korea's total market capitalization.

But only 13 percent of the country's workforce is employed by firms with more than 250 employees, the second lowest after Greece in the OECD, and far below the 47 percent in Japan. "The big companies have mastered a business model to survive without boosting hiring," as labor costs rise and firing legacy workers remains difficult, said Kim So-young, an economics professor at Seoul National University.

Yet while increasing numbers of college graduates are moving overseas for work, South Korea is bringing in more foreigners to solve another labor problem – an acute shortage of blue collar workers.

South Korea has the most highly educated youth in the OECD, with three-quarters of high school students going to college, compared with the average of 44.5 percent.

"South Korea is paying the price for its overprotection of top-tier jobs and education fervor that produced a flood of people wanting only that small number of top jobs," said Ban Ga-woon, a labor market researcher at state-run Korea Research Institute for Vocational Education & Training.

Even amid a glut of over-educated and under-employed graduates, most refuse to "get their hands dirty", says Lim Chae-wook, who manages a factory making cable trays that employs 90 people in Ansan, southwest of Seoul. "Locals simply don’t want this job cause they think its degrading, so we're forced to hire a lot of foreign workers," Lim said, pointing to nearly two dozens workers from the Philippines, Vietnam and China working in safety masks behind welding machines.

In the southwestern city of Gwangju, Kim Yong-gu, the chief executive of Kia Motor supplier Hyundai Hitech, says foreign workers are more expensive but he has no choice as he can't find enough locals to fill vacancies.

"We pay for accommodation, meals and other utility costs in order not to lose them to another factory," said Kim. Out of a staff of 70, 13 are Indonesian nationals, who sleep and eat at a building next to his factory.

NO HAPPY ENDING FOR EVERYONE

For those who escaped Korea's tough job market, not all has been rosy.


Several people who found overseas jobs with government help say they ended up taking menial work, such as dishwashing in Taiwan and meat processing in rural Australia, or were misinformed about pay and conditions.

Lee Sun-hyung, a 30-year old athletics major, used K-move to go to Sydney to work as a swim coach in 2017 but earned less than $A600 ($419) a month, one-third what her government handlers told her in Seoul.

"It wasn't what I had hoped for. I could not even afford to pay rent," said Lee, who ended up cleaning windows at a fashion store part-time before she returned home broke less than a year later.

Officials say they are making a "black list" of employers and improving the vetting process to prevent recurrence of such cases. The labor ministry also established a "support and reporting center" to better respond to problems.

Many on the programs lose touch once they go overseas. Almost 90 percent of the graduates who went abroad with the government's help between 2013-2016 didn't respond to the labor ministry's requests about their whereabouts or changed their contact details, a 2017 survey showed.

Still, the grim job market at home is driving more Koreans to the program every year. The government has also increased relevant budget to support rising demand - from 57.4 billion won ($48.9 million) in 2015 to 76.8 billion won in 2018, data released by lawmaker Kim Jung-hoon shows.

"The government isn't scaling up this project to the extent we would worry about brain drain," said Huh Chang, head of the development finance bureau at South Korea's finance ministry, which co-manages state-run vocational training programs with the labor ministry. Rather, the focus was on meeting growing demand for overseas experience given so many graduates are outside the workforce, Huh added.

A hopeful scenario would be for the economy to one day make use of the resources these graduates bring home as experienced returnees, Huh said.

For 28-year-old K-move alumni Lee Jae-young, that feels like a distant prospect.

"The one year abroad added a line in my resume, but that was about it," said Lee, who returned to Korea in February after working as a cook at the JW Marriott hotel in Texas. "I'm back home and still looking for a job." - Reuters

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Malaysia's economy: Fine growth with minimal inflation

Click to enlarge:  http://clips.thestar.com.my.s3.amazonaws.com/clips/business/Business%20Pg6-0305.pdf

The economy continues to chug along just fine even as it recorded the first inflation of the year in March. The consumer price index (CPI) rose 0.2% in March 2019 from the previous year.

The recovery away from a deflation in the previous two months was driven by the transport and the food & non-alcoholic beverages components of the CPI.

MIDF Research said in its report that the country's consumer inflation is likely to stay low following the lower capped prices of RON95 and Diesel at RM2.08 and RM2.18 per litre respectively.

Nevertheless, it said that the demand-push factor remains firm amid stable job market and steady wage growth.

Meanwhile, labour force growth has maintained at 2.1% year-on-year (yoy) in Feb 2019 while employment growth inched down to 2.1% yoy while jobs added in the economy was recorded at 34,000.

It noted that the number of unemployed people officially increased by 1.6% yoy.

But it noted also that growth in both the labour force and employment continued to outpace unemployment growth for the last 24 months since Mar 2017.

"The stable job market reflects healthy development of Malaysia’s economy and provides solid support to domestic demand," the research house said.

Meanwhile, exports dropped 5.3% yoy in Feb 2019, the lowest in more than two years mainly due to a short calendar month on top of the long Chinese New Year (CNY) holidays.

Imports also fell and it declined more than exports at 9.4% yoy.

During the CNY holidays, all Chinese factories were shut down with most of them closed one or two weeks prior to the festive holidays. As the celebration put a halt to mass production, it disrupted the global supply chain resulting in a weak trade performance.

All sectors recorded a negative exports growth: agriculture (-13.7% yoy), manufacturing (-4.3% yoy) and mining (-5.5% yoy).

Despite the poor exports and imports figures, trade surplus maintained at above RM11bil in Feb 2019.

When compared with the previous month, both exports and imports contracted by 22% and 24.8% 
respectively.


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Job cuts: rightsizing the oil and gas industry

THE slide in global crude oil prices has left a trail of casualties in its wake.

Oil companies and governments that rely on the price of crude oil for profit and revenue have been hurt by plunging receipts from lower crude oil prices.

For countries dependent on commodities such as crude oil, the effect cuts deeper. Their currencies have felt the brunt from the weaker crude oil prices and it is this group of countries that have a reliance on commodities that have seen the biggest depreciation against the US dollar compared with oil importing countries.

While the macro picture hogs the headlines and generates most of the chatter, the real micro cost of plunging crude oil prices has been felt by employment in the sector.

Many oil majors have announced job cuts to manage costs that had spiralled upwards during the boom days in the industry. Oil majors now have resorted to slashing their workforce amid the biggest downturn in the industry for decades.

For Malaysia, that impact is telling. Between January and July, the Malaysian labour market has laid off 6,547 people (not inclusive the voluntary separation schemes for Malaysia Airlines and banks). But 30% of that number, or nearly 2,000 people who lost their jobs, have come from the oil and gas industry alone.

“It is getting worse,” an oil industry executive says on the job cuts plaguing the industry. He says the oil major he works for is in the midst of a rightsizing exercise and that will mean many jobs will need to be slashed in the coming months.

“We have to reach a new equilibrium for the economies in the oil and gas sector.”

And it does not seem like the industry has hit a trough when it comes to retrenchment.

Part of that is down to the outlook for the price of crude oil. Although there is optimism that prices have hit a bottom, there is another school of thought that predicts more pain for the sector.

Supply from shale oil and future Iranian oil, once trade sanctions are lifted, are clouding the supply dynamics for crude oil and gas.

With expectation that oil prices will remain weak for the foreseeable future, oil majors continue to announce job layoffs. More jobs are expected to be cut next year.

In the US alone, oil companies are reported to have laid off more than 86,000 personnel from June last year up to September of this year. With many global giants having a presence in Malaysia, the workforce in the country will likely be included as part of a global cut in workforce.

Poor profit

The main culprit for job cuts among oil and gas has been the financial performance of those companies. As profits plunge, the knee-jerk reaction is to cut costs, and employment is in the crosshair of such cuts.

The hit on leaner employment prospects has already been told through not only the fall in crude oil prices but also cuts in capital expenditure and operating expenditure by Petronas Nasional Bhd. Companies that service the upstream segment of the industry have been the worst hit.


Downsizing: The main culprit for job cuts among oil and gas has been the financial performance of O&G companies. As profits plunge, the knee-jerk reaction is to cut costs, and employment is in the crosshair of such cuts. — EPA

Petronas, the driver of the local oil and gas industry, has cut its operating costs and that has meant lesser demand for services provided by the oil and gas industry.

An industry official says Petronas, for its part, is not retrenching employees at the moment despite pressure to maintain profitability. It will cut bonuses in order to keep its permanent staff.

“There is no rightsizing of permanent staff at Petronas but whether it renews the contracts of high-paying employees is another thing,” he says.

The hardest hit segment on the industry’s value chain has been upstream activity. The cut in the number of exploration rigs and the associated services indicates the predicament the industry is going through.

The collapse in the price of crude oil has meant that companies are less inclined to spend on searching for new sources of crude oil. It makes matters worse when it is already costly to search for such oil in areas such as deepwater oil fields.

“As revenue comes down, staff are being redeployed from upstream to downstream. Staff will also be asked to multi-task but whether they can do that is another thing,” he says.

A pickup in hiring activity in the upstream segment is not expected as long as crude oil prices are anaemic.

Job cuts have taken place in that segment as a result of dimmed prospects in the industry.

With prices not expected to bounce up significantly, job prospects will remain dim. The general consensus is that crude oil prices are expected to remain sluggish for the short- to medium-term and that has necessitated the cut in expenditure and staff costs.

Trickle down effects

The oil and gas sector is not the only segment that has laid off workers as the pace of retrenchments seemed to have picked up pace.

Maybank Investment Bank says in a report that retrenchments rose sharply in the second quarter, up 56.7% year-on-year to 3,213 in the second quarter compared with a 14.4% increase to 2,789 in the first quarter of this year. “Retrenchments in the construction sector went up as a number of major projects are nearing completion amid slow replenishment rate. The oil and gas sector’s retrenchment has been on the uptrend since the second half of 2014, coinciding with the plunge in crude oil price.

“At the same time, services industries like ‘finance, insurance, real & business services’ and ‘transport, storage & communications’ also showed uptrends,” it says.

Between January and July of this year, statistics indicate that 47% of retrenched workers are skilled, 40% semi-skilled and 13% unskilled.

It is the loss of skilled jobs, such as that by the oil and gas sector, that will have a big knock-on effect on the rest of the economy. The higher than average salaries that those workers once commanded will evaporate from the system and the absence of which will trickle down to the different sectors of the economy.

The slump in the industry has already been felt in the areas surrounding KL City Centre (KLCC), which is said to be the operational hub for oil and gas companies in Malaysia.

Hotel occupancy is down in Kuala Lumpur, especially those around KLCC. The Kuala Lumpur Shangri-la, which is the benchmark for hoteliers in the country, has announced a 10% drop in revenue in the second quarter of this year.

Apart from hotels, rental demand for houses surrounding the KLCC area has been acutely felt with the loss of jobs in the oil and gas industry.

“There has been a knee-jerk reaction especially around the KLCC area,” says a property consultant.

He says tenancies have been cancelled with oil and gas workers retrenched and for those who still have their jobs, their employers are housing them in different areas in the city.

“The numbers are down but it is not significant. There has, however, been a downgrade in the choice of accommodation,” he says.

The outlook though is not going to be rosy. With gross domestic product clocking a growth rate of 4.9% in the second quarter compared with growth of 5.6% in the first quarter, the slower growth rate will eventually bite into the prospects of employment.

“The labour market lags economic activity. There will be a lag of one or two quarters as companies won’t immediately lay off workers,” says an official.

By JAGDEV SINGH SIDHU

Fewer job vacancies due to wait-and-see attitude.

INDUSTRY experts say the shrinking number of job vacancies in the country is due to companies adopting a “wait and see” approach, putting on hold any expansion plans because of economic uncertainty..

Other worse-affected businesses which cannot afford to wait, they said, are downsizing, contributing to the rising number of retrenchments that totalled 6,547 until July this year..

While retrenchments are pressured to rise, what is worrisome is that the number of job vacancies has been on a decline over the past few years. The new openings for jobs have fallen from 1.62 million jobs in 2012 and 1.4 million in 2013 to only 1.07 million last year..

The biggest drop in vacancies was seen in the manufacturing sector, followed by the services sector..

Vacancies in the manufacturing sector fell from 598,890 in 2012 to 352,784 positions last year, a massive 45% drop in just three years..

Retrenchments in the sector was also the highest last year with 5,716 job cuts..

In the services sector, job vacancies went down from 369,983 in 2012 to 275,199 available positions in 2014, while retrenchments were up by an additional 1,151..

The construction sector also saw fewer job vacancies last year, with only 202,878 positions compared to 310,954 two years earlier..

Vacancies in the mining and quarrying sectors saw a marginal increase, up 19% from 2,180 to 2,605 jobs. But conditions have soured in the mining industry led by the slump in global crude oil prices..

The sector saw retrenchments surge almost four-fold from only 81 in 2012 to 318 job cuts last year..

Economist Yeah Kim Leng says the authorities must scrutinise data very carefully to find out to what extent the drop in job opportunities are due to the slowdown in investments and business expansions..

“The Government needs to look at the factors affecting business confidence and the measures to alleviate these factors..

“Given that the investment pipeline seems healthy, the declining number of vacancies is very surprising,” he says..

Yeah expects the situation to improve in the second half of next year, once the Chinese economy stabilises and commodity prices recover..

The Government is currently mulling the possibility of setting up an Employment Insurance Scheme to help retrenched workers in the country..

Deputy Human Resources Minister Datuk Seri Ismail Abd Muttalib said early this month that the scheme, aimed at helping retrenched workers through temporary financial aid, reskilling and upskilling, was announced in Budget 2015 last year..

“In Malaysia, during the economic crisis of 1997-1998 and 2008-2009, we had a steady increase of unfair dismissal cases filed at the Industrial Relations Department. “After those periods, the cases returned to a normal pace. With an economic downturn possibly occurring in the near future, we are getting worried that dismissal and retrenchment cases would go up tremendously,” he said..

The total job loss in Malaysia as a result of the 2008/09 global economic crisis was around 40,000, out of which around 60% were in the manufacturing sector..

This was less severe compared with the estimated total job loss of 84,000 during the 1997/98 Asian financial crisis..

The unemployment problem in Malaysia during the global economic crisis was somewhat cushioned by the “more considerate” strategies taken by companies, which included cutting down their operating hours or days and reducing the salaries of their workers, so as to retain as many workers as they possibly could, instead of cutting headcount..

Weak business sentiment.

Although there has been an increase in investment approvals by the Malaysian Investment Development Authority, Yeah says, business sentiment needs to be monitored..

“We must monitor closely to see if they are going ahead with their investments or are pulling out,” he says..

Business conditions in Malaysia have deteriorated this year, with the Business Conditions Index by the Malaysian Institute of Economic Research painting a grim outlook after the second quarter of the year..

The index fell to 95.4 points from 101 points in the previous quarter. A reading below 100 indicates pessimism..

It also found that the local and export sales outlook was bleak, and capacity utilisation rate had dipped further..

The survey, conducted each quarter to assist in assessing the short-term economic outlook, covers a sample of over 350 manufacturing businesses operating in 11 industries..

Areas explored include production level, new order bookings, sales performances, inventory build-up and new job openings..

In June, Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said although Malaysia had more than 400,000 people looking for jobs at any given time, the Government had set a target that 75% of graduates would find employment within six months of graduation..

According to the latest numbers from the Department of Statistics, in July this year, there were 459,900 Malaysians unemployed compared to 394,100 in July last year, a 16.7% increase..

The unemployment numbers have been on a rise every month since April this year, from 429,000 to 460,000 persons jobless in July..

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan says the situation is worrying as it means that many graduates would not be able to secure employment due to the shrinking number of vacancies..

“The ability to create middle-level management vacancies is a challenge now due to the economic condition..

“Nobody is sure what is going to happen, so companies have adopted a wait-and-see attitude..

“They are not making any new commitments. They are just maintaining what they have – if possible – or downsizing,” he says..

Shamsuddin says employers need the extra confidence from authorities in order to fix the situation..

“To stimulate employment, incentives have to be given directly to the sector. For example, there are incentives for companies that hire women who have been on a career break for over six months..

“The same can be done for companies that hire fresh graduates, for example, who have not secured jobs after a certain period,” he says..

This, he says, could be in the form of salary subsidies for the first few months..

By P. ARUNA.

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