Workers in the electrical and electronics sector may face mass retrenchments if the current economic trend persists, according to Malaysian Institute of Economic Research (MIER) executive director Dr Mohamed Ariff.

Speaking to reporters after presenting the institute's annual economic briefing in Kuala Lumpur today, Mohamed said the retrenchment problem in the electrical and electronics sector could be serious given reports about companies closing down their operations in Malaysia.

"I think it's quite a serious one. The electrical and electronics industries are the ones that are the worst affected by the current slowdown. There is even news about current companies packing up and leaving," he said.

"I think the worst fear comes from that particular sector," he said when commenting on the job prospects for the sector.

According to Mohamed, many had earlier thought that the US electronics sector would recover by the third quarter of this year, but there is still no clear indication that this would happen.

Shrinking more

Last week, the minister of Human Resources Dr Fong Chan Onn said that based on feedback the ministry received, the US economy is recovering and the impact of retrenchment "will likely be minimal".

Asked to comment on Fong's statement, Mohamed said, "I think it's unlikely it (the American economy) will recover by the end of the year or early next year."

He explained that given the current market outlook, the electronics industry may only recover by the third or fourth quarter of next year. Because of this, there may be retrenchment and a contraction in output from the sector, he added.

When requested to give an estimation of how many workers would be affected, he said it is difficult to give an actual figure, reiterating that "it is likely to be serious".

"It's actually shrinking more than what we thought it would," he said, adding that the situation in Malaysia is very much dependent on what happens in the United States (US) and there are many contradictory messages coming out from the US regarding its economic situation.

Two weeks ago, Malaysian Trades Union Congress (MTUC) president Zainal Rampak was reported as saying that 90,000 workers from the electrical and electronics sector may be retrenched by year-end.