PETALING JAYA: The government should consider the doubling the wage subsidy programme announced in the Covid-19 economic stimulus package if it would save more jobs, especially if there is an extension of the movement control order (MCO) according Sunway University Business School’s Professor of Economics Dr Yeah Kim Leng (pix)
“Given the huge decline in income due to the Covid-19 pandemic, both employers and the government will be hard pressed to offset it,” he told SunBiz.
“The preservation of businesses and jobs will therefore require employees and workers to also temporarily shoulder part of the burden together with the other two stakeholders to see through the health crisis.”
The programme, which was introduced by Prime Minister Tan Sri Muhyiddin Yassin to mitigate the impact from the pandemic, will see a contribution of RM600 to every employee earning less than RM4,000 per month for three months if their employers have seen a 50% decline in income since Jan 1, 2020.
The subsidy is estimated to benefit 3.3 million workers and to contribute 12.2%, or roughly RM16.5 billion, in total salaries and wages paid each month by some 900,000 SMEs in the country.
Yeah highlighted that as SMEs contribute almost 40% to Malaysia’s gross domestic product (GDP) and account for more than 60% of employment, a shrinkage due to business closures and liquidation will translate into a reduction in the nation’s production, entrepreneurial capacity and growth potential.
He opined that stretching the fiscal deficit to 5-6% of GDP or more for 2020 and incurring higher debts is acceptable as long as the country reverts to its medium-term fiscal consolidation path when the health crisis is over and the national and global economy normalises.
“Given the uncertainty over the coronavirus spread and the inevitable economic consequences of the containment measures, the government has to be inventive and responsive in crafting the appropriate fiscal stimulus as and when needed to minimise economic hardships as well as the destruction of production capacity as encapsulated in its industries, businesses and jobs,” said Yeah.
On the ground, One-Tech (M) Sdn Bhd director and CEO Harith Ridzuan echoed the sentiment, saying that while the government incentive is good, it is just a temporary fix, as business owners and others like him need further government assistance to take care of their employees in the long term.
Harith said his sustainable wood product manufacturing business has seen its sales almost halved due to the outbreak, which was further complicated by the introduction and the subsequent extension of the MCO.
“As an SME, we do not have enough internal funds to cover the cost of maintaining our workforce without them working . So, one of the main assistance we urgently require is government subsidisation that can help us maintain our workforce until the pandemic subsides,” Harith told SunBiz.
One-Tech also hit a roadblock with employees that work remotely, and are tasked with ramping up the company’s online presence and sales of available stock because packaging, stock managing, and product labelling for e-commerce transactions requires employees to operate on factory grounds.
At the same time, consumers have tightened their purse strings and cut down on non-essential spending.
Harith said he is trying his best to survive the downturn but like many other businesses, he finds that keeping the company afloat without downsizing to be challenging.
“Our main concerns are the welfare of our employees as well as the future of our business. If nothing is done to protect our local SMEs, we will surely see more businesses and factories closing down and unemployment rates rising dramatically,” he cautioned.
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