Amid the indefinite lockdown, the president of the Small and Medium Enterprises Association of Malaysia, Michael Kang warns that there may be massive retrenchments or wage cuts from this month onwards, given the uncertainties over the Covid-19 situation in the Klang Valley.
According to FMT, Michael said that most companies managed to sustain their staff salaries and operations until the middle of last month, but not so after that.
He added that employers were at a loss for continuing their operations even though they have to shut their doors following the lockdown and enforcement of the enhanced movement control order (EMCO) in parts of Kuala Lumpur and Selangor.
“In May and till mid-June, most were still holding on to their workers, hoping for the situation to improve, but the number of cases keeps going up.”
“From July onwards, it’s going to get worse. There are too many uncertainties and most of us do not know when we will be allowed to operate.” he said.
While the situation worsens, Michael said that many workers were being asked to go on unpaid leave since June. However, due to the indefinite lockdown under the EMCO and Phase 1 of the National Recovery Plan (NRP), employers were no longer able to sustain their business anymore.
“By the end of July, many will shut down temporarily or permanently and by October, half of the 1.2 million SMEs are likely to shut down.” he warned.
Nonetheless, Malaysia previously reported a 4.5% unemployment rate in May. He then mention that this will likely to worsen from mid-June.
“We need guidelines, we need to know when we can start operating again. The situation is really bad.” Michael added.
On the other hand, Economist Yeah Kim Leng of Sunway University agreed that the 4.5% unemployment rate in May will likely to surge in June. He added that most companies expected to keep a minimal number of workers from July following the uncertainties brought by the spike in Covid-19 cases.
In addition, Yeah said that those who had failed to migrate their business online may shut permanently and this may have a detrimental effect on the economy with the snowballing effect.
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