KUALA LUMPUR, Aug 19 ― Close to half of the manufacturers polled in an industry survey will have released as many as three in 10 workers by December in a bid to mitigate the fallout from Covid-19.

As of July, 17 per cent of respondents have already reduced their headcount by between 10 and 30 per cent.

The Federation of Malaysian Manufacturers said another 25 per cent of respondents in their survey expect to retrench up to a third of their staff by year-end.

“Most of our respondents agreed that they need to reduce labour costs,” its president Tan Sri Datuk Soh Thian Lai told reporters at the federation's semi-annual survey briefing here.

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Over 60 per cent of manufacturers said they would reduce manpower, mostly by freezing hiring that could last until next year when the economy is forecasted to rebound.

Most businesses had also cut salaries across the board, with the top management taking between a 10 and 20 per cent reduction. Executives and non-executives mostly took a pay cut of 10 per cent.

Hiring in the manufacturing sector nosedived to an unprecedented level in the first half of the year, latest industry survey data revealed, as factories and producers felt the full brunt of the movement control order (MCO) enforced to contain Covid-19.

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Businesses suffered a record slump with the activity index falling up to 59 points to 31 in the first half compared to the same period last year, while local and export sales fell 50 points each, FMM said.

Movement restrictions caused severe supply chain disruptions that wreaked havoc across the sector that accounted for more than a fifth of GDP, forcing employers to cull jobs and freeze hiring.

Manufacturers expect Covid-19’s impact to last for the rest of the year even as most respondents in its business conditions survey reported some recovery as of June, as the government lifted some restrictions.

But FMM said most of its members were still reeling from the effects. The movement curbs have prompted many to look to automation to cut reliance on manual labour, which could lead to more job losses.

Close to half of respondents, or 43 per cent, said they expect to cut jobs throughout next year.

Employees said they could lay off between 10 and 20 per cent of their staff in 2021 in a forecast that cast doubt over the official prediction of a rebound.

Bank Negara Malaysia during its second quarter GDP announcement last week said it expects growth to reach 8 per cent next year as governments worldwide begin to reopen their borders and trade.

Malaysia's economy shrank at levels lowest since the 1998 Asian Financial Crisis, at -17 per cent year-on-year.