MORE than two-thirds of manufacturers will cut their staffing costs via pay cuts and layoffs, said the Federation of Malaysian Manufacturers (FMM).

“As of July, 17% of manufacturers have reduced their employee count by 10%-30%

“While another 42% will be retrenching 10%-20% of their staff members next year onwards,” said FMM president Soh Thian Lai at a press briefing in Kuala Lumpur today.

The Statistics Department reported last month that unemployment had worsened to 5.3% in May, affecting some 826,100 people.

He added 53% of the manufacturers surveyed said they will implement pay cuts with most planning 5%-20% off for top management and 10% for other employees.

Soh was presenting key findings of the FMM-Mier Business Conditions Survey that was conducted last month.

He said 43% of the manufacturers surveyed will also freeze hiring while another 21% plan on removing non-contractual allowances and benefits.

Another 19% of the manufacturers surveyed said they will remove part-time staffing and outsourcing.

The survey found that 17% of the manufacturers have reduced the number of daily work hours, enforced annual leave (16%) and reduced working days (17%).

Putrajaya announced last week that Malaysia’s GDP had contracted 17.1% in the second quarter of 2020, its lowest since the fourth quarter of 1998.

The FMM survey was carried out from July 2-31 and covered topics such as business conditions, sales, capital investment, production volume and employment.

For the survey, interviews were done with 549 respondents from 16 industry sub-sectors such as chemical products (14.9%), food, beverage and tobacco (14.6%), electrical and electronics (10.4%), plastic products (9.5%), fabricated metal products (8.4%) and others.

The survey was equally split among companies by size with large companies comprising 32.8%, medium (29%) and small (37.5%).

More than two-thirds of those surveyed were small-and-medium enterprises.

Among the key findings were that business activity index for the first half of 2020 has fallen to record low of 31 (from 59), local and export sales fell 50 points to 16% and 21% respectively, and capital investment has dropped 48 points to 61 as compared to the second half of 2019.

The twice-a-year survey is used as an indicator of manufacturing confidence in the country. – August 19, 2020.