Malaysia plans to allow 3-day week to avoid layoffs

KUALA LUMPUR, Jan 29 - Malaysia's government is to allow companies and factories to move to a three day week in order to preserve employment at a time of falling demand for its exports and plant closures by major foreign companies.

Malaysia exports are equivalent to its gross domestic product and the exports fell for the second successive month in November, with the electrical sector that accounts for around 40 percent of the total especially hard hit.

Japanese electronics giant Panasonic Corp <6752.T> is to close two of its three Malaysian plants, according to press reports this week.

U.S. company Western Digital Corp is to close a plant employing 1,500 workers here while Intel Corp is to close two of its assembly plants, according to local press reports.

"It is the duty of the department to ensure that workers were adequately protected and at the same time, companies did not lose out," Labour director-general Ismail Abdul Rahim told state news agency Bernama on Thursday.

Ismail, outlining the plan for the three-day week, said that workers would have to agree to the shorter working week.

Malaysia's government is scrambling to put together a second fiscal package to boost the economy after an earlier round of spending worth almost $2 billion came under fire for being too little and too late.

The government is sticking to forecasts that the economy will grow 3.5 percent this year, despite the gloomy outlook for exports that has hit Asia hard amid the global economic slowdown that started with the U.S. mortgage crisis.

Most private sector economists believe that Malaysia will slide into its first recession since 2001.

A Malaysian government official said recently that almost 45,000 workers, mostly in electronics, would be laid off as a result of the slowdown in global demand.

Malaysia's unemployment rate was 3.3 percent, according to the latest data.