Employment Outlook For 2009

Recruitment consultants remain positive on the local job market for 2009, but speak of changes, for both employers and employees.

Late last year, Citigroup sent shockwaves across the world when it announced that 52,000 jobs worldwide would be lost by early this year. This was in addition to the 23,000 jobs it had cut from January to September. In November, Dutch electronics giant Philips said it would lay off 5% of its workforce at its healthcare division.

However, things are not as gloomy on our shores. According to recruitment consultants, the Malaysian economy is relatively insulated compared with other countries. While some employers are becoming more cautious about their recruitment and compensation budget, wide-scale retrenchment is unlikely to occur, they say. What’s more, high-growth sectors are still in need of manpower, while quality talents continue to be in demand. And, if you have been actively adding value to your company’s bottom line, you still stand to be duly rewarded.

Steady for now“There is no need to panic as the signs are still positive at the moment. We should not be overly pessimistic about the outlook, even though we may experience more of a downturn,” says Ross McKenzie, Malaysia country manager of recruitment specialist Robert Walters. “Other markets have more exposure to the effects of the recession. So, they may suffer more. I think Citigroup’s situation illustrates the point very well, as most of the job losses come from the sale of its business processing operations in India, and from its German retail banking operations.”

McKenzie observes that the Asian economy has become more resilient after surviving the 1997/98 Asian financial crisis and the 2003 SARS [severe acute respiratory syndrome] outbreak. Furthermore, Malaysia is faring better than its Asian neighbours. “Unlike Singapore, we’re not officially in a recession. Although there is a slowdown, it’s very much business as usual. Our company is still receiving lots of requirements from our key clients across the sectors. There are even new foreign businesses that are planning to set up offices in Malaysia,” he says.

Employers more cautious and selectiveIn uncertain times like these, most employers are likely to adopt a wait-and-see approach, said Madhvi Pande, compensation practice team lead at Hewitt Associates, in an interview last November. “As of now, the forecast for Malaysian economy is still strong. There are no significant actions from the employers yet. It’s still too early to tell. We’d probably see the full impact in nine or 12 months’ time.” Be that as it may, Pande believes that the current economic climate will cause employers to be more cautious.

“It will make businesses think twice. They will ask themselves: ‘It may not hurt us yet. But are we prepared if this happens?’” The implication is that employers may be more selective compared to the go-go days. As Melissa Norman, country manager of Kelly Services points out, organisations will be more critical of their existing talents and new recruits. “We feel that the selection process will be a little more stringent. When hiring, organisations will want to ensure that the candidates hired are able to show results quickly and contribute positively,” she elaborates.

Sunny Khoo, practice leader, human capital group, Watson Wyatt, says top performers will still be in demand. “Based on our recent Pulse survey conducted in response to the financial crisis, attracting and retaining high-potential employees was the biggest priority for most of the companies,” he says, adding that the banking and financial sector will be on a “cautiously optimistic mode”. “All hirings, whether replacements or new hire, will be supplemented with business justification.

Eventually, only the top candidates will get the job. If this scenario persists, it may lead to higher unemployment rates, especially among fresh graduates. It will be an employers’ market, or rather it has started to be one.” In mid-November, theSun reported that the government would form two committees to monitor job terminations and potential retrenchments, and to provide re-skilling, retraining and re-employment to assist retrenched workers.

However, Hewitt’s Pande believes that companies are more likely to focus on better utilisation of manpower instead of laying off employees on a big scale. “They are likely to conduct a productivity analysis and assess the return on their human capability. Employers will focus on training and development to improve employees’ job skills. They will also make use of alternative work arrangement like part-time jobs.

Essentially, there’ll be more planning in putting money in the right areas, so that it can increase output,” she explains. Using a Federation of Malaysian Manufacturers (FMM) news report as a reference, Khoo reckons that there are no foreseeable massive layoffs. “However, some companies, especially the manufacturing concerns, are looking at cost cutting by reducing shift times, working hours, and partial shut-down of operations. The scenario will be clearer after the first quarter,” he says.

In late November, the New Straits Times reported that the FMM’s 2,300 members have not retrenched their workers. This remains the case even though orders are already declining by as much as 20% to 30% due to lower demand from overseas. FMM’s president Tan Sri Yong Poh Kon was reported to have said that to cope with the situation, some members might close their factories for a longer period than usual at year-end while others might decide not to extend their foreign workers’ contracts.

“Retrenchment is the last resort. Now, we have members who are cutting work hours,” Yong told the paper.Meanwhile, Norman believes that prospects will remain positive for high-quality talents. “People will continue to be the driving force in any organisation’s success. The question will be whether the talents will be able to consistently prove their ability to add value to their respective roles,” she says.

“The market is experiencing a talent crunch. However, talents with proven track records and who are able to add value to any given role will be in demand. With that in mind, we urge candidates to continue to upskill themselves by harnessing their personal and professional skills.”

Money and rewardsWhile most Malaysian employees may not have to fret over losing their rice bowl, recruitment consultants are generally more conservative on monetary returns. According to the Towers Perrin “Compensation in Crisis” Pulse survey, over 90% of companies in Asia are still planning base pay increases for 2009.

However, respondent companies in Malaysia reported a decline in planned 2009 base pay budgets from 6.7% to 6%. “There wouldn’t be a drastic increment. Gone are the days when companies can pay 30% extra to hire new employees,” Khoo says. McKenzie concurs, believing that the negotiating power of an employee will be reduced in a market facing recession.

“At the moment, we are not affected as yet. But employees also have to be realistic in terms of salary increment. We do not know how significant the impact will be,” he says, adding that employers are expected to be more cautious in rewarding their staff. “Buy-out bonuses are not likely or will be done selectively.

Blanket increments due to inflation are not going to happen. Bonus and increment will be focused on performance,” he says. Khoo adds that the amount of funds allocated for staff’s incentives will either be maintained or reduced. “So, the question is, how is the fund going to be distributed? Obviously, top performers will get more. So if you’re a mediocre performer, you can forget about your bonus,” he says.

The meritocracy practice mirrors Hewitt’s latest survey on Asia-Pacific salary increase. According to Pande, half of the 50 companies in Malaysia surveyed say there will be no changes in their budgets, while the other half who are planning to review their budgets say they are reserving the merit pool for high performers.

“While this has always been the case, it’s even more important now,” she stresses.Steven Pang, regional director (Asia) of Aquent, an international marketing and creative staff agency, encourages talents in the creative and media-related industries to focus less on monetary rewards.

“If you are a fresh graduate who is looking to get your first job, you should be smart about it and go for solid companies. You’ll also need to increase your stamina as your workload is going to be doubled. This is not the time to tell employers ‘I want more money and fewer hours’,” he points out. As for talents in the mid to senior levels, expect to receive fewer job offers, Pang adds. “Don’t chase the money.

Be cautious about your career move and weigh out the risks and rewards.”“The options may not be there any more as employers are going to be very selective about who they take in. In Malaysia and Singapore, our clients are cautiously hiring those with high productivity,” Pang elaborates

Issue 89 (January 2009) of Personal Money.