7.3 million jobs at risk as SMEs teeter on edge of collapse

ON May 28, Prime Minister Muhyiddin Yassin announced a second full lockdown, this time for two weeks starting June 1. As Malaysia logged a record 9,020 new Covid cases the very next day, a strict lockdown became the preferred method of many to stem the crisis, regardless of how much it will hurt our economy, our educational processes, and socioeconomic development.

The majority of us believe human life is of the highest concern. This is undeniable true. “God has made (man’s) life sacred” is what the Quran tells us.

However, there are still miscellaneous misconceptions among us, perhaps because of a lack of understanding, that it isn’t possible to maintain a good life during pandemic. By believing that health as the only factor for a decent life, we are already mistaken in denying the fundamental role of a healthy economy in our wellbeing.

Perhaps knowledge of the basic structure of economy, how it functions, and how it is closely associated with our lives can correct our early misunderstanding. 

Firstly, we have to understand the importance of having business entities around us that are properly functioning. Having business entities contribute to two biggest benefits to people: goods/services for consumption and employment. We will have to agree that we do not make the majority of our household needs, either in the form of groceries or daily necessities ourselves and they need to be bought. 

This includes not only groceries but also medicine, educational books, clothes, hair-cutting services, tuition services, internet access and many more. 

Secondly, the money we pay for the purchases are converted into revenue for the business enterprise to pay its workers. In order words, the amount of money that the households spend will determine the level of income of the workers, who are the breadwinners of the households. 

If this flow of income system from business entities to employees is disrupted, in this case frequently via MCOs, there will be no buying resulting in no revenue for business entities and consequently, more people are laid off which translates into no income for the households with which to fund a decent life.

How many people are affected in such a scenario? How many of our people rely on these business entities to live? 

The Department of Statistics reports there are 15.2 million workers (2021) in Malaysia. After deducting the 1.7 million employees in the federal and state-level civil service, including in the statutory bodies and local authorities, we have around 13.5 million workers who earn a living in private or semi-private business entities.

One gets a clearer picture of the relationship between us and micro, small-and-medium enterprises (MSMEs) when one looks at the following numbers

A report SME Corp released in March show that MSMEs play a huge role in our economy, contributing 39% to the GDP (2019). In terms of employment, 48.4%, or 7.3 million of the total 15 million-strong workforce are employed in the MSMEs.

It should therefore be understood that while we need to protect lives by for isolating ourselves to prevent the virus from spreading, let us not forget that life is not really life if we also isolate ourselves from the economy . The government needs to give more aid to the poor households to get an income that is lost due to the dying MSMEs. Otherwise, it will not achieve its aim to protect lives. – May 31, 2021.

* Wan Omar Fadhli Wan Mahmud Khairi reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.

Sign up or sign in here to comment.