Up to 51,000 may be retrenched by June 2025, says Socso official

Should there be a spike in the inflation rate or another pandemic, retrenchment figures could reach 81,000 people by June 2025, the head of Socso’s Employment Insurance System office said.

KUALA LUMPUR: 

Retrenchment and 

rightsizing

 could potentially affect 51,000 people by June next year, according to a Social Security Organisation (Socso) official.

Azirruan Arifin, who heads Socso’s Employment Insurance System (EIS) office, said this figure projected by Socso would be double the number of employees who were retrenched last year.

This is the projection based on normal circumstances. But in the worst-case scenario, if inflation spikes or a pandemic hits, we’re looking at around 81,000 people,

 he said at the 11th Malaysia Statistics Conference here.

Azirruan said the US’s tariffs on China-made products have led to market dumping, making it difficult for companies, including Malaysian firms, to sell their goods. 

And because these companies can’t sell their products, they will start to implement cost-cutting measures, which could result in retrenchments,

 he said, adding that Malaysian companies have around 60-70% exposure to the Chinese market.

Another factor that could drive up retrenchment rates was the growing reliance on artificial intelligence (AI), which was causing certain jobs to 

disappear

, he said.

Jobs like secretaries will disappear due to AI tools like ChatGPT. Even some lawyers and accountants will be affected,

 he said.

However, Kiranjit Singh, head of Ipsos Strategy3 Asia Pacific, said that globally, companies were not expected to resort to layoffs to cut costs or trim their workforce.

This is because retrenching employees is expensive (due to the severance packages). What will happen is that companies will rely on natural attrition, where there will be a slowdown in hiring (and employees leave the company on their own),

 he said.

He added that Ipsos had particularly shifted its priorities in terms of expenses.

According to Kiranjit, while payroll increases were its largest expense for the past decade, AI investments have taken the lead in the last two years.

“Looking at Singapore, for example, it is becoming increasingly difficult to secure foreign employment passes. Job creation is expected to be more challenging.

If you are a blue-collar worker, this will not affect you. But white-collar workers will be affected,

 he said. - FMT