WE are five months into the Covid-19 crisis, and the coronavirus is showing no sign of going away. In certain parts of the world, especially the United States, its rage appears uncontrollable. At home in Malaysia, there seems to be some light at the end of the long tunnel. But the economy has taken a hit.
The Malaysian Institute of Economic Research's (MIER) worst-case scenario — with the Movement Control Order (MCO) extended into two weeks of the second quarter and 96 to 98 per cent of business resumption — makes for spine-chilling reading. Under this clime of assumptions, Malaysia's gross domestic product (GDP) is expected to shrink by 2.9 per cent compared with last year, bringing with it real GDP losses of RM102 billion.
There is more bad news: job losses of 2.4 million out of our 16 million-strong labour market. Of this, 1.6 million job losses are from the unskilled category and 780,000 from the skilled group. Private consumption is expected to go south by 11 per cent with household income losses recording RM95 billion. Even MIER's best-case scenario — MCO same as above, but 100 per cent of business resumption in the third quarter and an increase of a further two per cent in the fourth quarter — the picture isn't as pretty as we want it to be. If real GDP contracted by 6.9 per cent in the former case, here it is contraction still, but at 2.61 per cent. But the real GDP growth is 1.57 per cent. MIER projects a job loss of 951,000, again mostly in the unskilled category. Due to the negatives, household consumption will fall by 4.9 per cent.
What can be done to fight this slump that Covid-19 has brought us? Surely, the fight cannot be funded by the government alone. Malaysia is already three stimulus-package-old and there isn't that much of cash in the government's coffers. Some, like the Malaysian Employers Federation (MEF), have suggested that Malaysia put its hand into the government reserves of RM400 billion to save the companies ("Govt can dip into RM400b national reserve to help Malaysians: MEF" — NST, March 26). This cure may cost more than the disease. Better still, organisations such as MEF and the Federation of Malaysian Manufacturers partner in saving the economy rather than threatening layoffs.
Layoffs should only be resorted to if the company is going under. Surely some of the cash stashed away during the good times can help keep the workers on the pay roll, with some help from the government. MEF is on record as saying that the government's stimulus package is paying only seven per cent of the remuneration of its workers. MEF wants 70 per cent instead. This is a big ask. Worse still, is getting the Social Security Organisation (Socso) to pay for the Covid-19 tests of employees. Employers should pay for them as Covid-19 tests are mandatory, like any other tests. Employers must realise by now that their workers' health is their wealth. Let's keep the Socso funds for the sick and injured, and their families.
MIER has suggested an additional stimulus of RM75 billion in its economic report, with specifics on where the money should go. This again may pose some stress to the national coffers. Perhaps the best way is to make it possible for banks to issue cheap loans to Malaysian companies that need help. This the government can do with little pain. It is better than handouts.