THERE has been no major job losses despite the manufacturing industry experiencing a downtrend, manufacturers and employers said.

They said despite the slowdown, the industry was doing all it could to keep its workforce.

They also said that although the global economic slowdown was impacting the sector, the outlook of Malaysia’s labour market was positive and expected to strengthen further in 2023.

Federation of Malaysian Manufacturers (FMM) president Soh Thian Lai said the findings of the FMM Business Conditions Survey 1H (first half) of 2023 showed that the majority of employers are maintaining their headcount at the current juncture.

Soh said the manufacturing sector started to show signs of a slowdown in the first quarter of 2023.

This, he said, was because global growth has remained subdued and the world economy continues to face headwinds amid weak growth prospects, elevated inflation and heightened uncertainties.

“Growth has been affected by the weak external demand for the manufacturing sector which saw a growth of just 3.2% in the first quarter versus 3.9% in 4Q2022.

“The growth in the sector saw a further decline in the second quarter which saw the sector grow by 0.1%.”

Last week, the Finance Ministry (MOF) said Malaysia’s economic expansion in Q2 was underpinned by growth in the construction, services and manufacturing sectors.

“The construction sector recorded the strongest performance, soaring 6.2% in the quarter, followed by services (4.7%) and manufacturing (0.1%),” it added.

The MOF also said external demand for the second half of 2023 will continue to be affected by global vulnerabilities.

This includes geopolitical tensions, the continuing supply chain disruption, tight monetary policies to address global inflation and the growth prospects of major economies, many of which are Malaysia’s leading trading partners.

Soh said the slowdown in growth is a global phenomenon where organisations such as the International Monetary Fund have projected global growth to fall to 3% in 2023 from 3.5% in 2022 and projected it to remain at 3% in 2024.

He said the manufacturing sector showed signs of a slowdown from the beginning of the year.

This, he said, was reflected in their bi-annual FMM Business Conditions Survey 2H 2022 conducted in January to February 2023.

“FMM is currently finalising the findings of the next FMM Business Conditions Survey 1H 2023 and the preliminary data shows a continued slowdown in activity in 1H 2023 and outlook for 2H 2023.  

“This does not bode well for the economy as the manufacturing sector has been the engine of growth for the economy even during the Covid-19 pandemic.”

He said that the global economic slowdown was definitely taking a toll on the sector and the economy as a whole.

“In June 2023, the Industrial Production Index recorded a contraction of 1.6% in the manufacturing sector (compared to 5.1% in May).

“The deterioration in the manufacturing output in June 2023 was influenced primarily by a 3.9% decline iin export-oriented industries (compared to 2.8% in May), the second time this year following an initial decline in April 2023.

“The contraction was also in line with the country’s export performance which dropped by 14.1% in June 2023 and xperienced by numerous countries globally.”

Soh added that domestic-oriented industries continued to expand, albeit at a moderate rate of 4.1% compared to 10.1% in May 2023.

“This is expected to hold for the manufacturing sector while external demand starts to pick up.”

More job opportunities

Malaysian Employers Federation president Dr Syed Hussain Syed Husman said the employment sector remained stable up to the first half of 2023 despite a weaker gross domestic product (GDP) rate.

He said the outlook for Malaysia’s labour market was expected to strengthen further in 2023.

This, Syed Hussain said, was supported by positive momentum in the domestic economy as well as modest expansion in external sectors.

“Expansion in primary sectors as well as construction and services will create more employment opportunities.

“The strengthening of the labour market in 2023 will enhance consumer consumption and contribute to overall GDP growth for 2023.”

He, however, said the country’s manufacturing sector was expected to stay weak for the rest of 2023 due to the slowing down and challenges faced by the global economy.

“The manufacturing sector will remain weak in the third and fourth quarter 2023. The weak performance of the manufacturing sector is expected to weigh on Malaysia’s third and fourth quarter GDP growth.”

As a major trading nation, he said the manufacturing sector was linked to the conditions of the global economy.

“Manufacturing sector growth was weighed down by weak external trade performance as  exports of goods are expected to contract by 2.8 %, as compared to a growth of 11.1 % in 2022.

“The weakening of this sector calls for intervention by the government to ensure sustainability of manufacturing businesses, especially the Micro, Small & Medium Enterprises (MSMEs).”

Syed Hussain also said more workers will be up-skilled and re-skilled as required by the labour market.

“The private sector is involved in development and delivery of such technical and vocational education and training where students are exposed to skills required at the workplace.

“The higher education ministry also works closely with the private sector to ensure that those pursuing academic degrees are more employable,” he said.

He said the country needs a stable government so that the planned policies can be implemented.  

“Stable government will also attract investment, both local and foreign, and spur the economy.” –  August 26, 2023