The Hums at the Factories are Getting Louder

The Singapore Straits Times (Sept 27)did bring some indicative good news today about the state of the manufacturing sector in Malaysia.

Yes, at this time last year,it was bleak time for Malaysia’s manufacturing sector.Since last December, many factories started four-day work weeks which slashed the income of its employees by up to 20 per cent. Rumours were rife then that a three-day work week would be next. Some workers were told to go especially new ones.

Today some relief has slowly returned. Many are of the view that the worst may be over for the global economy.There has been a rebound in orders for most factories. Work schedules have been restored and many have their pay elevated to former levels.The morale in the factories is so much better these days.

The crash and subsequent rebound of the manufacturing industry, particularly in the electronics and electrical (E&E) sector, has resulted in Malaysia’s see-saw unemployment rate.E&E accounts for 40 per cent of Malaysia’s exports.After holding steady at 3.1 per cent for the third and fourth quarters of last year, unemployment shot up to 4 per cent in the first quarter of this year. Some 100,000 jobs were shed in those three months, most of them in manufacturing.

Given that sharp rise, the Malaysian government had forecast unemployment to be 4.5 per cent for this year, based on the assumption that the global downturn would last for a few more months, a government official told The Sunday Times.But then, monthly unemployment figures started falling. The jobless rate dropped steadily from 4.1 per cent in February to 3.6 per cent in May, which are the latest monthly figures available. Hence, the government may now revise the unemployment forecast for the year to below 4 per cent, the official said.

People working in the manufacturing industry, which had borne the brunt of layoffs during the downturn, are now the ones who are getting their jobs back, said Malaysian Trades Union Congress secretary-general G. Rajasekaran.“We haven’t heard much news of people being retrenched in the last two months. Instead, we hear that companies are rehiring,” he said.

Economists say that the return of orders to the E&E industry is one big reason for the rebound in employment. When the global meltdown struck, the sector was one of the worst hit. Like Singapore, Malaysia is an export-driven economy, and its E&E industry exports almost all of its products to key markets like the United States and China.With the global economy grinding to a halt at the end of last year, orders fell dramatically. But the demand for electronic products seemed to have recovered quickly.

Datuk Wong Siew Hai, chairman of the Malaysian American Electronics Industry (MAEI), feels that growth in the sector was driven by strong consumer demand for products like netbooks, mobile phones and smart phones, which continued to sell well in a sluggish economy.“Look at the new iPhone and the netbooks. They’re not too expensive, and everyone wants one,” he said.

MAEI represents 17 US companies, including giants Intel, Dell and AMD. The companies make up almost a third of the total value of Malaysia’s E&E exports, and contributed 11.3 per cent of the value of Malaysia’s total exports.MAEI members’ export sales rose more than 20 per cent in the second quarter of this year, and are expected to increase by at least another 10 per cent in the third quarter, said Wong.Besides E&E, there are other bright spots in the Malaysian economy.

Six days ago, Prime Minister Najib Razak said that the government’s two stimulus packages totalling RM67 billion were having a positive impact on the economy.He singled out the construction sector, one of the biggest beneficiaries.Construction grew by 2.8 per cent in the second quarter, while the services sector grew by 1.6 per cent.

But labour lobbyists like Factory Workers’ Coalition coordinator A.Sivarajan feel that it is too early to cheer.He noted that some retrenched factory workers have still not found jobs.Some became drivers while others ran illegal food stalls.Indeed, while Malaysia’s economy is rebounding, it is far from roaring.This year’s approved manufacturing investments are forecast to be only half of last year’s US$13.3 billion.It may be a while before the country sees quarterly growth rates of more than 7 per cent — the comfortable position it was in merely two years ago.

So, hold yuor horses! It is still too early to chill the beer glasses for a good cheer.