Tough year ahead for employees but more hope for job seekers

Kuala Lumpur, 4 March 2010 - Medium to Large Enterprises (MLEs) across the world decreased their employee numbers during 2009, the first time since Grant Thornton began researching employment issues in its International Business Report (IBR) in 2003 that the number of businesses cutting headcount has exceeded those increasing it. The survey, of over 7,400 MLEs across 36 economies, shows a global balance* of -8% compared to +21% in 2009 - a drop of 29 percentage points.

The global employment index shows businesses in emerging markets on the other hand enjoyed some of the biggest increases in headcount during 2009, including Vietnam (+54%), India (+33%), Botswana (+31%) and the Philippines (+29%). Some of the world's more mature economies suffered the greatest decreases in employee numbers, including Ireland (with a balance* of -54%), Spain, Denmark (both -38%) and the US (-33%). (see figure 1).

While the majority of businesses around the world are more optimistic for 2010, employees would be wrong to think the worst is over. When asked about their intentions for employee salaries in the year ahead, MLEs globally indicated that they were even less likely to give pay rises during 2010 than they were in 2009. 36% of businesses plan to offer no pay rise or reduce pay, compared to only 24% in 2009. And while 51% of employers globally did indicate that they plan to increase pay by inflation or above during 2010, this is down on last year when 64% made the same claim.

In Malaysia, the circumstances are looking positive as 63% of businesses plan to increase salaries of their employees during 2010, compared to only 44% last year and 30% are not offering any pay rise compared to 36% last year. Only 1% of business owners surveyed are reducing their employees pay compared to 6% last year.

While 2009 has been a difficult year, the future looks brighter. Businesses in 29 of the 36 economies surveyed expect to increase staff numbers in 2010, a global balance of +20% (compared to -4% in 2009). The most optimistic businesses were in Vietnam (+60%), Brazil (+59%), Botswana (+50%), Australia and India (both +47%). By contrast, European businesses were far more pessimistic than their counterparts elsewhere in the world with businesses in Ireland, Italy (both -14%), France (-10%) and Spain (-8%) continuing to expect to cut jobs.

Positioned at 14th place on the chart, 4% of the business owners in Malaysia are expected to increase staff numbers in 2010 compared to 20% in year 2009. This indicates a -16% percentage points decrease.

Business owners in neighbouring countries such as Vietnam (+54%), Philippines (+29%), Singapore (+13%) and even Thailand (+5%) showed positive signs of increasing the number of employees also. Thailand made the biggest jump going from a balance of -16% in 2009 to +5% in 2010, an increase of 21 percentage points. Thailand is followed by Vietnam and mainland China, with a percentage change of +6% and +3% respectively.

The report also shows how creative businesses became as they tried to avoid compulsory redundancies of permanent staff in 2009. 50% of businesses indicated that they needed to introduce measures to avoid redundancies and the survey results suggest that every possible approach was introduced. Reducing working hours (11%) and redeployment of staff (10%) were among the most popular measures globally but pay cuts, voluntary redundancies, career breaks, reduced benefits and laying off contract staff were all used to protect existing permanent staff and the business itself.

Dato’ N.K. Jasani, Managing Partner of SJ Grant Thornton explains, "Employment typically lags behind other factors when countries emerge from recession, as these results demonstrate. While job losses have been harsh in some economies, one of the features of this global recession is that unemployment has not been as high as originally feared. It is typical of the adaptability of medium to large enterprises that they have strived to retain their staff during the year."

Dato’ NK Jasani Managing Partner, SJ Grant Thornton (pic above)