Businesses pay the price for ad hoc public holidays, says economist

 

Economist Carmelo Ferlito said SMEs feel the impact of ad hoc public holidays due to their closer association with day-to-day operations. (Bernama pic)

PETALING JAYA: Last-minute public holidays, often declared for political reasons, will negatively impact a company’s productivity level, a leading economist said.

“It’s a cheap way to gain favour from voters and they (the federal government) do not look at the consequences for businesses,” Carmelo Ferlito of the Center for Market Education said.

The caretaker governments of Selangor, Kedah, Negeri Sembilan, Kelantan and Terengganu announced public holidays in their respective states linked to the state elections.

In the past, ad hoc holidays have also been announced for federal elections, extra days for Hari Raya Aidilfitri and to celebrate sporting achievements at both federal and state levels.

Carmelo Ferlito.

Combined with gazetted national and state holidays, this means that many Malaysians are eligible for between 18 and 21 public holidays a year.

“In terms of productivity, sometimes these holidays fall on a Thursday or Tuesday and therefore they may get linked with a Monday or Friday, (creating) a long weekend,” he said.

This, Ferlito said, would indeed disrupt a company’s regular business, an employee’s focus and the pace of certain projects.

While ad hoc holidays do not affect investor confidence and the flow of foreign direct investments (FDI), Ferlito said SMEs feel the impact due to their closer association with day-to-day operations.

SME Association of Malaysia secretary-general Chin Chee Seong said, nationwide, businesses suffer an estimated RM2 billion to RM3 billion in losses every time a last-minute public holiday is declared.

Chin said unplanned public holidays also disrupt the transport of goods.

This, he said, would lead to suppliers being hit with penalties for failing to meet delivery deadlines. They would also have to pay extra wage costs and overtime payments.

Chin said businesses still struggle to cope with the lack of manpower, especially following the migrant worker intake freeze.

“The major losses will be in the manufacturing, logistics, transport and agriculture sectors.

“Our productivity is worse than countries that have fewer holidays,” he told FMT, adding each holiday adds 5% to 10% costs for businesses.

He said FDI would also be affected due to the lack of confidence in Malaysia’s supply chain system, due to the sheer number of unplanned public holidays.

“We urge the government to look at this (issue) seriously,” he said. - FMT