Malaysian retailers expect to struggle over manpower shortage

The dearth of workers is the single biggest obstacle to the retail sector’s full recovery 


THE retail jobs in Malaysia remain vacant despite businesses being on a positive recovery path since the easing of Covid-19 restrictions in the second quarter this year (2Q22). 

Malaysia retailers recorded an impressive growth rate of 96% in retail sales in 3Q22 compared to 3Q21, according to the Malaysia Retail Industry Report. 

However, the retail landscape in the country is currently grappling with the labour shortage issue throughout the year. 

Manpower Shortages Hinder Retail Recovery

Tan views working in retail stores, and F&B outlets as undesirable career (pic: TMR)

Retail Group Malaysia (RGM) MD Tan Hai Hsin foresees that the shortage situation will remain in the first few months of 2023. 

“We have seen many shops with hiring signage at the shopfront, both in commercial centres and shopping centres. 

“Many of these hiring signages even stated the salaries and benefits clearly. This trend was rare in the past,” Tan told The Malaysian Reserve (TMR) recently. 

He said short breaks signage is also common to see in shopping centres nowadays due to severe labour shortages. 

He noted that this issue happened due to several factors which occurred during the pandemic. 

“There are more career options now compared to three years ago. 

“Some became delivery riders when the retail shops were forced to close down. While some started their own businesses using social media during the lockdown period,” he said, adding that foreign workers also have not returned to Malaysia which aggravated the manpower shortages. 

Concurring with Tan’s opinion, Savills Malaysia head of retail services Murli Menon also believes that the dearth of workers is the single biggest obstacle to the full recovery of the retail sector. 

“While this had always been a challenge in Malaysia, the fact that a number of foreign workers had been sent back during the lockdown period did not help,” Murli said in an email reply to TMR. 

He said the multiple changes in policies concerning foreign workers, cumbersome processes and paperwork contributed to the problems. 

“There is definitely a need to have a more streamlined and open policy as far as recruitment of foreign workers are concerned to ensure this is able to complement and add on to the limited local workforce,” he said. 

Some retail chains are slowing down expansion plans despite attractive opportunities, says Murli (Source: Savill)

In addition to the shortage of foreign labour, Murli said there is a significant shortage of local labour, as many have taken on more flexible opportunities created as a result of the pandemic. 

“This could be anything from opportunities in e-hailing and delivery services to owning online businesses that a lot of people from the traditional workforce had taken up and become used to as it offered flexible working hours and more independence compared to regular shift duties and fixed accountabilities,” he noted. 

Moreover, Tan views working in retail stores, and food and beverage (F&B) outlets as undesirable career. 

“Young generation prefers not to work in retail stores and F&B outlets because they need to stand the whole day, work for long hours, as well as on weekends and public holidays,” he noted 

To address the issue, he noted that retail operators are using several methods such as lesser staff to attend to customers, offering higher salaries, hiring more parttime staff, applying self-service, staff working longer hours, using robot servers and using disposable cutlery for F&B. 

‘War’ Within the Sector 

Meanwhile, Murli said in terms of salaries and benefits, the retail sector is currently experiencing a reverse price war as they compete to attract employees from other retailers, particularly those with adequate retail experience. 

“Aggressive poaching of employees from other retailers with increased salaries and benefits has also become a common practice as a sign of desperation. 

Therefore, he said some retail chains are slowing down expansion plans despite attractive opportunities due to the lack of experienced manpower. 

“Some retailers had to settle for lower standards of service levels as they have no choice but to recruit inexperienced staff and not having enough time or resources to train those recruited,” he added. 

The retail sector is currently experiencing a reverse price war as they compete to attract employees from other retailers, particularly those with adequate retail experience (pic: Bloomberg)

Staying Cautious Ahead of 2023 Outlook 

On the market outlook, RGM has forecasted for Malaysia retail industry to grow 3.5% in 2023. 

However, the biggest challenge for Malaysia’s retail industry for next year is the rising cost of living. 

According to Tan, prices of basic necessities and consumer goods have been rising since the beginning of 2022 and saw a double-digit growth within a short period of time. 

“Higher retail prices lead to higher cost of living. This means less money to buy non-essential goods and services,” he said. 

He noted that the shopping behaviour and patterns of the bottom 40% and middle 40% households also have changed in recent months. 

“They tried to cook more at home, delay buying high-value goods, pay greater attention to offers and discounts given by retailers, as well as lesser trips to nice cafes and restaurants,” he said. 

Nonetheless, there will be a reduction of personal income tax contribution by 2% next year from Budget 2023 which he sees as encouraging employees to channel extra money to retail spending on a monthly basis. 

“Still, the incentives and allocations may be changed because a new federal government was formed after the 15th General Election,” he added. 

On the possibility of a recession in Malaysia, Tan said the possibility is high, however, he opined that Malaysian is not currently experiencing one because their take-home pay has not been affected. 

“Malaysian consumers will turn cautious in their spending when their take-home pays dropped due to slow down in the economy,” he further said. 

He believes that consumers will cook more at home and dine at restaurants that offer affordable meals, buy lesser non-essential goods or buy second-hand branded goods and shop less on high-value goods. 

  • This article first appeared in The Malaysian Reserve weekly print edition