Published January 30, 2009

Malaysia allows 3-day work week to save jobs

Move may avoid layoffs and plant closures as demand continues to fall

By S JAYASANKARAN
IN KUALA LUMPUR

	Email this article
	Print article
	Feedback

THE Malaysian government has agreed to allow companies and factories to shift to a three-day working week to preserve jobs and avoid plant closures in an effort to help employers skirt labour laws that give considerable power to industrial labour unions. Like most countries, Malaysia has been hit by shrinking global demand leading to falling exports, sharply-reduced private investment and looming unemployment.

Exports are an important part of the Malaysian economy and an increasing number of foreign companies in Malaysia that make products solely for export using cheap Malaysian labour are facing sharply declining demand that make them not viable.

Exports fell for the second successive month in November, with the electrical and electronics sector, which accounts for 40 per cent of the total, especially hard hit. Japanese electronics giant Panasonic Corp has announced plans to close two of its three Malaysian plants, a move that could shed almost 1,500 jobs.

US company Western Digital Corp said that it would close a plant employing 1,500 workers here while Texas Instruments, in Kuala Lumpur, has offered some of its senor staff voluntary separation schemes. The Malaysian Employers Federation on Wednesday estimated that 10,000 jobs had already been lost since October last year.

The government explained its decision through its Labour Ministry. 'It is the duty of the department to ensure that workers were adequately protected and at the same time, companies did not lose out,' Labour director-general Ismail Abdul Rahim told state news agency Bernama yesterday.

Outlining the plan for the three-day week, Mr Ismail said that workers would have to agree to the shorter working week. Malaysian labour laws generally prescribe, by mutual consensus, a number of hours that an employer must pay his workers but there is no minimum stipulated. But a Japanese manufacturing company official told BT that the new directive would make it 'easier' to deal with the unions which are fairly powerful in the industrial sector.

With sharply slowing growth , Malaysia is scrambling to put together a second fiscal package, to be announced next month, to boost the economy after an earlier round of spending worth RM7 billion (S$3 billion) came under fire for being too little and too late.

The new package, which could be as much as RM10 billion, is underpinning Kuala Lumpur's hopes that it can still grow as much as 3.5 per cent this year, a projection that most private economists dismiss as wildly optimistic. The consensus opinion is between flat growth and 2 per cent.