SUNDAY STAR, 25 January 2009 FOCUS

Cold facts of retrenchmentFor workers, the worst consequence of the global economic crisis is being retrenched. To tide over the hard times,patience and co-operation between employers and employees is vital, along with a lot of help from the Government.

By JOSEPH LOH andRASHVINJEET S. BEDIsunday@thesfar.com.my

DURING the economic crisis of 1998,some 85,000 Malaysians lost their jobs.If estimations hold true, the situation is

expected to be twice as bad this time around,meaning at least 170,000 jobs are at risk.

Malaysian Employers Federation (MEF)executive director Haji Shamsuddin Bardansays the last economic crisis was mostly con­fined to the Asia-Pacific region, adding thatalthough production costs were higher, man­ufacturers could still export.

Malaysian Trade Union Congress (MruC)secretary-general G. Rajasekaran says overalldemand for products has gone down by anaverage of between 30 and 40%.

"Should the workers believe theGovernment or their companies when theyare told there is recession? Companies don'thave a reason not to produce if it hasdemand," says Rajasekaran.

"From what Ihave seen, the difficult timehas yet to come. Many employees have spo­ken to us and they are uncertain about thesituation," he adds.

The uncertainity is understandable. AsHuman Resources Minister Datuk Dr S.Subramaniam puts it, the current economicsituation did not come from within Malaysia,but from the state of the global economy atthe moment.

"What is happening in the United States orEurope is affecting us directly or indirectly,"he says.

Dealing with hard timesAccording to Rajasekaran, some companies

have reduced their production times from 24hours to 16 hours. This means cutting downthe work force from three shifts to two, leav­ing one shift without any work.

He says in such cases the companies mighttell their employees to come to work but givethem other jobs such as painting walls orhousekeeping.

"In any case, the workers are accepting it.It's about co-operation and mutual under-

Shamsuddin: 'To be fair, we must makesure people are not just chucked out ontothe streets'

standing," he says, adding that workers couldhowever, refuse to do a certain job if it is dan­gerous.

MEF's Hj Shamsuddin Bardan says it allcomes down to what options are left to acompany if the situation continues to godownhill.

He says MEF encourages its members todecide on retrenchment action as the lastresort.

"If companies were to let go of their humanresources, their future losses can be serious.

"You are going to lose the skills of thesepeople. Once the economy recovers, gettingsimilar replacements will not be easy. Newpeople must be retrained. There will be a timelapse before you are able to produce for cli­ents, and they may not wait for you," he says.

Shamsuddin feels that responsible employ­ers should undertake cost-cutting measures

Rajasekaran: 'Employers tend to retrenchthe longer-serving ones because they tendto receive higher wages'

first to remain afloat."Employers have the right to determine the

size of employment. If they can show produc­tion is down by 50%, they can reduce theworkforce by 50%.

"But to be fair, we must make sure peopleare not just chucked out onto the streets.What is important for workers is to remain inemployment," he says.

One way of doing this is to have temporaryshut-downs,like what is being done duringthe Chinese New Year holidays.

"But can employers make employees takeannual leave for this purpose, and for thosewithout any, can they be forced to takeunpaid leave?" he asks, adding that if this wasnot done, the cost to employees would bemuch higher.

Shamsuddin says Section 5 of theEmployment (Termination and Lay-Off

Benefits) Regulations 1980 does not haveclear guidelines on this matter.

"Whatever companies are trying to do forthe time being should be facilitated, and thelaws and regulations should be clear," he says,noting that the MEF has already urged theLabour Department to do the necessary for­mulation and allow companies to do this sothere is no retrenchment.

Reducing the workforceIf push comes to shove and there is no via­

ble solution left other than to retrench work­ers, the employers' obligations are clear.

There is the migrant labour factor to takeinto consideration, which is fortunate forMalaysians but not so to the 2.2 million for­eign workers here. .

Section 60N of the Employment Act 1955clearly states that in the event of a reductionin workforce, foreign employees should be thefirst to go if employed in the same capacity asa local - a rule that is somewhat unfair byhuman rights principles.

Says Shamsuddin: "As employers we musthandle them humanely, whether they arelocal or foreign. They cannot be left out in thelurch, but this is easier said than done,"

Rajasekaran says there are three issues ofcontention when it comes to retrenching ­the practice of last-in-first-out (LIFO), suffi­cient notice period and payment of benefits.

"Employers, however, tend to retrench thelonger-serving ones because they tend toreceive higher wages," says Rajasekaran.

Sufficient notice must be given to theemployees before retrenchment.

If the contract ofempioyment does notspecify the period of notice, the notice shallbe as follows: Four weeks notice for thoseemployed for less than two years; six weeksnotice for those employed from two to fiveyears; and eight weeks notice for thoseemployed for five years or more.

Rajasekaran says that he has heard of caseswhere workers are called up to the office atthe end of their workday and given envelopes.

"They are not allowed to open the letter

FOCUS SUNDAY STAR, 25 January 2009

Skills training forthe unemployed

_ GRAPHICS © 2009Sources: The Internet and STARIC

(send your resume around)

There are many job agencies out there, includingthose you can find on the Internet. Make looking for ajob your full-time job.Also don't be shy to tell people that you're looking for ajob and ask them forrecom mendations.

(Time to save)

Set aside some money (could be the lay-off benefitsyou received) for at least three to six months whilelooking for a new job. Restrict the use of credit cards anduse cash to avoid unnecessary charges. Shelf purchase of bigitems, such as a new house or car. Also, don't spend on unnecessary items andcut back on extravagant activittes such as fine dining and lavish holidays.

(Take it ~s ..nopportunity)Take retrenchment as an opportunity rather than athreat to your career. Itcould be a relief because your job may not have been suitable in the first place,oryou might not have enjoyed it very much.

(Don't burn any bridges )

In case of aturnaround and operations are back in full swing later on, youmight be called back for work. It would also be useful to obtain atestimonialfrom the company explaining the reason for the retrenchment.

(GO back to studying )

This is the time to upgrade your skills andknowledge. You might want to enrol in an MBAprogramme, so that when the market reboundsyou might be able to get a better job andcommand a higher salary.

(Don't be fooled )

There might be people out there looking to scam people of their money inthese desperate times. They might use the topic of recession to persuade youto invest money with them, claiming it would generate good income.

(F~nd supplementary income)

Good in the kitchen? Use your culinary skills to make or bake.Similarly, consider the option of giving tuition if you are amaster in any subject. Keep your eyes open foropportunities on the ground.

"The bank's responsibility, first and fore­most, is to sell the assets and repay all debts.Any balance would go towards the paymentof statutory obligations such as EPF, Socso andincome tax and any further balance after thatwould go to the payment of termination ben­efits,' he says.

Government assistanceThe Government is taking steps to ensure

that those who have been retrenched orunemployed are not left in the lurch. TheCabinet has approved RM100mil to help re­train retrenched workers and anotherRM70mii to provide skills training for single

mothers and unemployedgraduates.

Dr Subramaniam says theministry has started 80operational centres nation­wide to facilitate this initia­tive. Those seeking to enterthese programmes can go tothe offices or register them­selves with the ministry'sjobsmalaysia website (http:;/jobsmalaysia.gov.my).

"The Ministry will try tofind replacement work forthem, and if they are notsuccessful after one month,they will be re-channelled

into the re-training system where they will betrained in fields where there are vacancies."

He says graduates who have been unable tofind employment since 2007 are also eligiblefor the training system.

"All expenses are borne by the Government,and this is the aid provided to those facingemployment problems. They should use thisopportunity to expand their skills," he says.

Dr Subramaniam also advises those seekingemployment to better themselves to be morecompetitive.

"The better-skilled will be more successfulin comparison to the lesser-skilled."

The minister says what is more importantin today's difficult times is the co-operation ofall parties.

"I ask for all parties to cooperate and also togive and take. The Government is doing allthat it can. It is not permanent but a tempo­rary issue, and if we can tide this over andovercome these hard times, there is a brightertuture ahead."

> FROM PAGE 27

there and then. They are escorted to the bus,and when they open the envelope they aretold not to come to work the next day," saysRajasekaran.

The companies claim that if people knowthey are going to be retrenched they mightnot work hard and the quality of productsmight suffer and some workers might evensabotage expensive machinery.

It is, however, possible to terminate thecontract without notice by paying them inkind. Employees are entitled to not less than10 days wages for each year of service forthose of one to two years;15 days wctges per yearfor those employed fortwo to five years; and 20days wages per year forthose employed for morethan five years.

This means someonewho has worked in acompany for four yearswill receive wages equiva­lent to 60 days of work.

"At least they can man­age for a while until thereis a turnaround or untilthey find another job," hesays.

The payment of the lay-off benefits shouldbe made within seven days of the termination.

If companies do not fulfil any of these threerights, Rajasekaran advises workers to lodgereports with the Labour Department (www.mohr.gov.my) which has offices all over thecountry.

"The department will try to settle the issue.If there is no agreement, the officer sits as thepresiding officer of a court and can makeenforceable orders," says Rajasekaran.

He adds that workers should make theircomplaints as early as possible althoughclaims are valid for six years.

Rajasekaran also warns of situations inwhich companies go under "receiverships" orbankruptcies.

"The bank can take over, and if this hap­pens, workers are not likely to be paidretrenchment benefits."

Rajasekaran says almost 10,000 workerswere affected in such cases during the 1998crisis.