Employment Act amendments: Job market will be affected, say analysts

SHAH ALAM - Economic analysts expect that implementing the Employment Act 1955 (Amendment 2022) on Jan 1 will impact the country’s job market, especially those involving productivity and participation of women’s labour force.

Future Labor Market Research Centre (EU-ERA) economist Muhamad Zharif Luqman Hashim said the decline in worker productivity was likely to involve labour-intensive industries currently dominating Malaysia’s job market.

He said the sectors expected to receive a direct impact following the implementation were manufacturing and agriculture that represented the second and third largest contributor to the economy.

“If we look at it from the high labour force consumption standpoint, the reduction of working hours would reduce the capacity of a company,” he told Sinar on Tuesday.

Zharif said many small and medium enterprises (SMEs) that contributed to over 60 per cent to the composition of workers in the country were labour-intensive companies.

He said the issue of a decrease in workers’ productivity from the implementation was how it could be overcome if companies increased the use of technology in their company.

Zharif said in regards of the women’s labour force, it was not impossible that it could happen because employers would surely not hire women who were married due to the potential of giving them longer maternity leave.

However, he said the issue could be solved if the government prepared incentives to the employers to obey the amendment.

“As an example, Singapore provided a longer maternity leave, but the government will give an incentive of tax exemption or subsidies for the firms that obeyed such matters.

These steps could be done in Malaysia, it will not disturb the rate of women joining the job market,” he said.

Malaysian Economic Research Institute Research Chief Dr Shankaran Nambiar said the operational cost of a company would increase due to the implementation of the amendment.

He said companies were expected to channel the increase in costs towards consumers.

However, he expected that it would not bring any significant effects towards the price of goods.

“For companies that released products for the domestic market, operation costs will increase, contributing to the price hike.

“However, I don’t see the food and transport sector that were the largest contributors Consumer Price Index (CPI) will be disrupted due to the amendment of the act,” he said.