No matter the shape of the future recovery curve, the government must ensure that the most deserving groups are shielded from sluggish economic conditions, K Veeriah writes.
Although the Perikatan Nasional government has painted an optimistic outlook on the prospects for economic recovery for the nation, other stakeholders seem to think otherwise.
The Federation Of Malaysian Manufacturers has projected recovery to come between four months and two years depending on the sectors.
The Malaysian Employers Federation (MEF) has estimated that up to two million jobs will be lost due to the economic turbulence caused by the coronavirus pandemic.
According to an FMM-Malaysian Institute of Economic Research business conditions survey, almost half the respondents indicated they would reduce their workforce by 30% by the end of the year, notwithstanding the possibility of it spilling over to 2021.
Whether we believe it or not, the reality is our country is not out of the woods. The bare facts seem to suggest as much: a recent Bank Negara Malaysia report said that the country’s gross domestic product (GDP) has contracted by 17.1%.
Unemployment in June 2020 was reportedly estimated at 4.9%, translating to 773,200 jobs lost.
The Department of Statistics estimated that some 200,000 private sector jobs were lost, as the number of private sector jobs fell from 8.6 million in the previous quarter to 8.4 million in the second quarter.
The human resources minister said unemployment figures could be even higher as some employers were not reporting retrenchments though they are have a statutory obligation to do so.
The actual unemployment figures would be worse if job losses in the informal sector are included. According to a Department of Statistics survey in April 2020, 47% of the self-employed lost their livelihoods, and 35.5% reported a 90% fall in income.
Some 2.86 million of the self-employed were reported to have actually lost their only source of sustenance. And many of them came from the most marginalised segment of society, which includes hawkers, fisherfolk and farmers.
Bank Negara projects the economy will see a V-shaped recovery in 2021. We hope and pray this will happen.
But Amir Jalal, a research associate with Emir Research was reported (Free Malaysia Today, 28 April 2020) as saying: “However in reality the economy will experience a W-shaped recovery, in which after the MCO [movement control order] is over, the economy will turn around for a while, but will fall again due to debt burdens that are overdue, then followed by a rise after the economy is able to run normally.”
Whether our economy will see a V-shaped recovery or a more conservative W-shape recovery ought to be of utmost concern, not only to the government but all stakeholders. Whether the government should overly optimistic of a quick economy recovery, given the recurring challenges of the Covid-19 pandemic, is something that ought to be deliberated with utmost transparency.
We have centred our economic development policy on commodities such as petroleum, palm oil, rubber and timber. The economy has also depended largely on export-oriented manufacturing, tourism and the service sectors.
Given the uncertainties of the impact of the coronavirus pandemic, the escalating US-China trade upheaval and the supply chain distortion, we ought to ponder whether the government should be cautious in its economic projections.
Regardless of whether the country is on a V or W-shaped economic recovery curve, the government must continue to roll out stimulus packages to ensure that the most deserving segments of society – especially the bottom 40% and middle 40% of households – are not hit by sluggish economic conditions.
K Veeriah is a veteran trade unionist based in Bukit Mertajam, Penang