Boycotts will hurt Malaysian workers, businesses, say experts

They warn of a domino effect of job losses along the supply chain.

(FMT) – Experts have warned that the boycott of US-linked products sparked by the Israel-Hamas conflict may end up hurting Malaysian workers and businesses, as outfits such as Starbucks Malaysia struggle to deal with a months-long drop in customers.

Arulkumar Singaraveloo, CEO of Malaysia HR Forum, said the boycott of such businesses could see a domino effect of job losses, with the decrease in business volume likely to affect local workers and companies along the supply chain.

He said this would in turn affect the unemployment rate, which recently reached the pre-pandemic rate of 3.3%, as companies and their suppliers could see significant layoffs if the boycotts prolong.

“While layoffs may be minimal for some, such as food delivery riders, other blue-collar workers may face challenges securing alternative employment that offers comparable income levels,” Arulkumar told FMT.

Berjaya Corp Bhd founder Vincent Tan recently called on the public to stop boycotting Starbucks Malaysia, saying the move only hurts the locals running the company.

The business tycoon said up to 85% of Starbucks Malaysia’s employees are Muslim and that no foreigners are employed at the company’s head office.

Sparked by the Israel-Palestine conflict, the boycott has heavily impacted BFood as Starbucks Malaysia contributes 90% of the group’s revenue.

Research houses have also issued “sell” calls on BFood’s stock in anticipation of ongoing earnings pressure.

Economist Yeah Kim Leng of Sunway University said the boycotts could create uncertainty over the future of employees at the affected companies, particularly in the food and beverage industry.

He said while industry consumer spending remains encouraging, facilitating room for alternative means of employment, the job offers employees receive may not be as lucrative as before due to the increase in labour supply from retrenchments caused by boycotts.

“If there is an increased supply of employees, employers will not be pressured to pay higher wages as they can choose from different applicants. They (employees) will likely face lower wages,” Yeah said.

He said the boycotts would also lead to “inter-industry leakage”, or the loss of revenue across supply chains, adding that employees are unlikely to receive bonuses or increments as business incomes decline.

Malay Economic Action Council chairman Norsyahrin Hamidon however said the boycotts would not necessarily affect employees as consumer choices might benefit the competitors of the boycotted companies, keeping jobs in the market high.

He said as consumers seek alternatives to boycotted businesses, the demand for employees to support these alternatives might increase.

“When people don’t choose coffee A, coffee enthusiasts will go for coffees B, C or D. This will improve (the alternative companies’) business and increase demand, so they will expand and hire more staff.