DESPITE recent encouraging signs on the economy, the job outlook for fresh graduates or out-of-work factory labourers is glum.

The Malaysian Employers Federation (MEF) said the majority of companies are not looking for new employees but are, in fact, in the process of restructuring and even shedding workers.

“Many are adopting a wait-and-see attitude, they want to see what is coming next,” MEF executive director Shamsuddin Bardan told The Malaysian Insight.

“Their ability to create new openings for mid-level and junior executive positions is challenging. This trend is expected to continue till next year,” said Shamsuddin, referring to the entry-level jobs that fresh graduates usually fill.

These fresh graduates are like the ones The Malaysian Insight interviewed, who said they had trouble landing jobs after graduating because of the tough job market.

Ainatun Nadrah and Saiful Naquib Mohd Yusoff were forced to start their own businesses after spending several fruitless months searching for a decent job.

MEF’s observation of the current job market comes even as government figures show that trade with other countries – a major income-earner for the country – has soared in the first five months of the year.

Exports in May soared 32.5% year-on-year to RM79.4 billion, beating most market forecast.

International Trade and Industry Minister Mustapa Mohamed said exceptional trade figures for Malaysia in April and a projected trade growth rate for 2017 of 5% could lead to more job creation.

But that piece of good news was balanced out by the fact that the Nikkei manufacturing purchasing managers’ index (PMI) – a bellwether for the manufacturing sector – registered the lowest reading in five years.

Market analyst firm IHS Markit said the PMI reading of 46.9 in June reflects souring business conditions in the manufacturing sector, which make up about 23% of the Malaysian economy.

A reading of above 50 reflects growth in the sector while less than 50 indicates a slump.

Yellow alert 

One reason the good news on trade and the recovering world economy is not translating into more jobs is because the higher productivity that is driving growth is not coming from workers, said Shamsuddin.

“Companies are increasing their productivity by adopting high technology and automation, while reducing the numbers of workers.”

For instance, banks have cut between 18,000 and 19,000 jobs in the past few years as they moved their customer operations online.

“The same thing is also happening in the insurance industry,” he said.

These days, technology is enabling firms to do more with fewer workers, including those who are skilled and even fresh graduates, said Shamsuddin.

In March, a Bank Negara report stated that the unemployment rate among youth had reached 10.7% in 2015, more than three times the national unemployment rate of 3.1%.

The Nikkei PMI reading also provided an insight into the economy’s health and the job market. New orders, production output and jobs in the manufacturing sector make up 75% of the PMI, said independent economist Azrul Azwar Ahmad Tajuddin.

“Falling new orders is a sign of weaknesses in underlying demand, a yellow alert that the economy could be in for a rough ride.

“In the face of worsening business conditions and slowdown signs, this index provided insights in June 2017 into how manufacturers eased production, crimped employment, especially new hiring and streamlined inventories.”

The PMI’s plunge in June from a high of 50.7 in April could be a warning that the economy will grow slower in the second quarter of this year, said Azrul Azwar.

However, he said it was still unclear whether the dip is temporary or a sign that things will worsen in the manufacturing sector.

The other problem affecting the job market is that the 200,000 expected annual vacancies from those retiring in the private sector are only going to come in July 2018, said MEF’s Shamsuddin.

This is after the government extended the mandatory retirement age to 60 in 2013. Those who were 55 and below in 2013 will only start retiring in 2018.

“But even if 200,000 retire in July 2018, the government may extend the age again to 62.” – July 11, 2017.