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Malaysia's technology workers nervous but employed

By Patrick Chalmers

PENANG, Malaysia (Reuters) - Electronics industry workers in Malaysia's Penang state are watching their backs but so far the tropical technology hub has escaped the worst of a global round of high-tech sackings.

Nooraini Nor, a 33-year-old mother of three, still has her warehouse job with a leading Japanese electronics firm though she worries what might happen when her contract expires.

"We used to be permanent, now it's contracts. I have a contract for three months," she said at the road-side noodle bar run by her husband.

"If they don't want you to continue, they don't renew."

Cattle egrets fly overhead after a day spent in nearby paddy fields, where Nooraini's mother-in-law has worked all her life.

Her Malay family has prospered since Penang bet on the nascent electronics business three decades ago, when high unemployment and declining industries like tin smelting left the state government seeking labour-intensive alternatives.

The then chief minister Lim Chong Eu chose electronics over activities like wig-making, turning Penang island and the stretch of mainland which make up the state into a magnet for foreign investment, worth 3.3 billion ringgit ($900 million) in 2000 alone.

The state's manufacturing sector employed nearly 195,000 people as of December last year, 118,000 of whom worked for electronics industry blue bloods from Japan, the United States, Taiwan, Singapore and elsewhere.

SILICON VALLEY A WORLD AWAY

While Penang has earned the inevitable "Silicon Island" title, the northwestern peninsular Malaysian state never saw the pay and stock option explosion of the U.S. West Coast original.

Penang Development Commission data shows most unskilled electrical and electronics workers start on under 17.5 ringgit ($4.6) a day and engineers on 1,500 to 2,500 ringgit a month.

But Malaysia is vulnerable to any slowdown in electronics and electrical product demand from the United States, which last year imported 59 billion ringgit or 27 percent of a sector that accounts for 59 percent of all Malaysia's exports.

The central bank forecast electronics output growth dropping below 10 percent this year versus 2000's red-hot 44.8 percent.

Major job cuts to date in Penang have been limited to disk drive giant Seagate Technology Inc, which is shedding 4,000 staff in an efficiency push that closed its drives-assembly plant.

Chipmaker Intel Corp has cut discretionary spending and overtime at its assembly and test facilities while Dell Computer Corp -- whose Penang plant supplies Asia-Pacific markets with personal computers, laptops, servers and the like -- still plans to expand.

Chief Minister Koh Tsu Koon, in power since 1990, said state government strategy had been to select emerging technologies, continually train the workforce and sing Penang's praises as a cost-competitive manufacturing site.

He said Penang workers, drawn from a multi-racial population of 1.2 million Chinese, Malays and Indians, had the linguistic and cultural skills to fend off competition from developed countries as well as low-cost competitors like China and India.

"We are definitely a much more cost-effective centre than the Western countries and Japan, Taiwan, Korea and Singapore," Koh said, highlighting the state's high-grade infrastructure and a British-based legal framework as other advantages.

He contrasted Malaysia's population of some 22 million people with the billion plus in both India and China, indicating the futility of trying to compete as a low-cost, low-skill centre.

"Obviously we have to look at what are the areas that we can do best and focus on those areas," he said, identifying niches in photonics, telecommunications, software and multi-media products.

Finance Minister Daim Zainuddin has told industry not to expect federal government help in the form of a relaxation of the ringgit peg, set at 3.8 to the dollar, urging more efficiency instead.

Koh said the global slowdown had caused some job losses in Penang but added the majority of firms were cutting hours worked and employee allowances rather than payrolls.

Asked about Nooraini's job security fear, Koh said firms should decide their contract arrangements. He said government encouraged worker retraining instead of sackings and the firing of foreign workers before locals.

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Malaysia lays off 1,829 Apr 15-21; retrenchment under control: Ministry

KUALA LUMPUR (AFX-ASIA) - A total of 1,829 workers were laid off from Apr 15-21, but the trend of retrenchment is under control as the number of layoffs almost balance the number of job vacancies, the Business Times quoted Human Resource Minister Fong Chan Onn as saying.

Job vacancies for the same period were 1,742, he said.

However, he added that there exists a mismatch situation between the sector with the most layoffs and the sector with the highest number of vacancies.

The electrical and electronic industry had the highest number of retrenchments while the service and plantations sectors has the most vacancies, he said.

Some 1,471 workers were laid off from the manufacturing sector, followed by 142 from financial service, insurance, property and business, 107 from trade, retail, hotel and restaurant sectors and 109 from other sectors, he said.

He also said most of the layoffs were due to the relocation of multinational corporations to countries with cheaper labour cost or due to automation, and not because of economic setbacks.

He also dismissed claims by the Malaysia Trade Union Congress (MTUC) which is expecting the number of retrenchments to reach 100,000 by year-end.

According to the labour market report, 37,897 vacancies were reported to the Manpower Department between January and April 21 this year, but this is believed to be only 50 pct of the total vacancies as it is not compulsory for employers to make reports to the Manpower Department, the paper said.

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