PETALING JAYA | SMEs have sounded a warning that there may be massive retrenchments or wage cuts from this month as uncertainties over Covid-19 continue in the Klang Valley.
The Small and Medium Enterprises Association of Malaysia said most companies could still sustain staff salaries and operations until the middle of last month.
However, its president, Michael Kang, said that from this month, employers were at a loss over how to continue the operations as many were shuttered following the lockdown and enforcement of the enhanced movement control order (EMCO) in parts of Kuala Lumpur and Selangor.
“In May and till mid-June, most were still holding on to their workers, hoping for the situation to improve, but the number of cases keeps going up.
“From July onwards, it’s going to get worse. There are too many uncertainties and most of us do not know when we will be allowed to operate,” he told FMT.
Kang said many workers had been told to go on unpaid leave in June but with the indefinite lockdown under EMCO and the national recovery plan, many employers are unable to sustain their businesses any longer.
“By the end of July, many will shut down temporarily or permanently and by October, half of the 1.2 million SMEs are likely to shut down,” he warned.
He said the unemployment rate of 4.5% in May would likely worsen from mid-June .
“We need guidelines, we need to know when we can start operating again. The situation is really bad.”
Economist Yeah Kim Leng of Sunway University agreed that the 4.5% unemployment rate in May was likely to surge.
He said most companies were expected to keep only a minimum number of workers from July following the uncertainties brought about by the spike in Covid-19 cases.
Yesterday, the number of new infections soared to a record high 9,180.
Many who failed to migrate to online businesses may shut permanently, Yeah said, and this would have a snowball effect on the economy with the expected job losses.