The Malaysian Insight

MALAYSIANS have had to endure pay cuts as companies are unable to afford high labour costs while Covid-19 is still battering the economy, said the Statistics Department.

Chief statistician Dr Mohd Uzir Mahidin told The Malaysian Insight the overall mean and median of salaries in Malaysia for the past year had reduced, as employers chose to lower workers’ salaries instead of enforcing layoffs.

The pandemic has affected the income of the economy, largely dominated by the services (57%) and manufacturing (23.5%) sectors.

A total of 11.7 million people are employed in these sectors – equivalent to nearly 80% of total employment in Malaysia, he said.

Only the rubber, plastics and pharmaceutical industries remained strong during this pandemic.

“The monthly manufacturing statistics showed that from January to November last year, the mean salaries and wages paid was RM7.22 billion while its median was RM7.19 billion – a decrease from RM7.35 billion in 2019.”

Uzir said the total salaries and wages paid in the manufacturing sector decreased by 2.7% (RM21.4 billion).

“Almost all the sub-sectors recorded a decrease in salaries and wages, mainly in transport equipment and electrical and electronic products.

“But there were sub-sectors that had their sales value increase during the crisis.

“These are the manufacturing of rubber and plastic, and the manufacturing of pharmaceutical products, which experienced a growth in sales value by 22.4% and 21.2% respectively.”

As a result, the number of employees for both mentioned industries also recorded an increase, he said.

“The registered number of employees in the rubber and plastic products industries went up by 7,059 to 276,000 persons, while those in the pharmaceutical products industry rose by 2,415 to 23,751 employees.

“The average salaries and wages per employee for the said industries also increased to RM3,417 and RM2,258 respectively.”

For the manufacturing sector in 2020, the mean and median salaries per employee were RM3,267 and RM3,275 respectively. This is a reduction from RM3,277 and RM3,262 in 2019.

As for the services sector, the total salaries and wages paid decreased by 2.5% or RM24.7 billion, Uzir said.

“It is undeniable the 16.9% or 2.5 million own-account workers, which comprise daily wage earners in our country’s employment, are affected, as well as tourism-related industries.

“The mean salaries and wages for the services sector in the first three quarters of 2020 was RM24.4 billion while the median was RM24.7 billion.

“Compared with 2019, the mean and median of salaries and wages were RM25.24 billion and RM25.25 billion respectively.

“Correspondingly, the mean and median per employee in the services sector were RM2,202 and RM2,222 respectively in 2020, a drop from RM2,209 and RM2,235 in 2019.”

Wage subsidies

Lockdowns remain a countermeasure for the coronavirus pandemic in Malaysia, since the implementation of the first movement-control order on March 18 last year.

“With factors such as limited hours of operation and physical distancing, less manpower is needed. Employers conducted job rotations or reduced working hours,” he said.

Uzir referred to the Global Wage Report 2020-2021 by the International Labour Organisation, which stated Malaysia and at least 40 other countries had adopted the “temporary wage subsidies” policy during the crisis.

“This policy of wage cuts is widely seen as employers seeking to retain their workers, with some executing a temporary layoff.”

The government had also launched wage-subsidy programmes as financial assistance for employers to support locals earning RM4,000 or less.

The softer labour demand by industries during the pandemic caused the number of unemployed last year to spike to more than 700,000, as opposed to around 500,000 under normal circumstances.

“The Social Security Organisation’s employment insurance system reported that a total of 160,554 individuals successfully secured jobs last year.

“It was also reported that 12,907 individuals successfully acquired jobs at the beginning of this year, from January 1 to 22.”

The current outlook shows stiff competition in the recruitment and hiring process, Uzir said.

A survey by Mercer conducted between April and June last year found that 84% of the local companies had frozen hiring last year and 81.4% said the freeze will remain until business stabilises. – February 23, 2021.