March 18, 2020, will forever be etched in our memory – the day Malaysian government enforced the Movement Control Order (MCO) in the hope of arresting the spread of the Covid-19 pandemic. It was initially enforced until March 31, but extended to April 14 and today (April 10), the government has further extended the MCO to April 28.
Though it is a necessary step in the fight against Covid-19, the MCO has certainly dampened the spirit of many, as businesses besides those classified as essential goods by the government are forced to close for the duration of the MCO. This has caused undue stress on the financial standing of many companies as the work stoppage means interruption to the revenue streams. The ripple effect is enormous – hiring freeze, lay off and retrenchment of workers and the worst scenario being business unsustainability resulting in bankruptcy and permanent closure. A report by Eugene Mark dated April 6, 2020, in ChanneNewsAsia.com stated “Shutdowns on economic activity and weak external demand for goods and services will clearly hurt corporate profitability. If companies are unable to service their debts, bankruptcies could be on the rise”. The economic impact is so far-reaching and expected to lead to a recessionary period. And, it might take years for many businesses to recover when the dust finally settled.
The only silver lining is perhaps the emergence and spike in businesses that offer services that meet the needs of people in times of movement restrictions. Leading the pack is food delivery services, e-hailing, logistics, and online businesses. No doubt for these companies, hiring is ongoing. However, the new normal seems to be hiring on a contract instead of a permanent basis. My latest experience is a case in point. My candidate was offered employment on a 12-months contract which will be automatically converted to a permanent role upon completion of the 'contract' period. This, by all intent & purposes, is a permanent role but the company sees fit to present it as an initial 12-months contract before converting to permanent. Although contract hiring is not new, this development begs the question – is contract hiring the ‘new normal’?
Before we answer that question, let us first get to the basic. What is a contract? Oxford defines a contract as “a written or spoken agreement … that is intended to be enforceable by law”. What then is an employment contract? Simply put, an employment contract is a signed agreement between an individual employee and an employer that establishes both the rights and responsibilities of the worker and the company. Some employment contracts may specify a duration (i.e. contract hiring) as opposed to one that has an ongoing period (i.e. permanent hiring). In a contract hire, your career in the company ends as soon as your contract period ended irrespective of your good performance and contribution to the company. Granted, in some cases, the contract may be extended although, by the spirit of the letter, it typically ended the moment the duration expired.
Most contract hiring is for the purpose of meeting temporary requirements for manpower resources and often unbudgeted hiring for a specific project or seasonal needs. However, due to the current Covid-19 outbreak and the state of the economy, many companies are likely to hire based on contract hiring as a safeguard measure irrespective of whether it is to meet temporary resources needed or for long-term human capital need. This, it seems, is the new normal in talent acquisitions.
It is therefore advisable that job seekers – both fresh graduates and experienced – adapt to this new normal instead of expecting or insisting that hiring be on a permanent basis. Indeed, this attitude will get you more mileage in your job hunt as it is likely to be an employers’ market instead of employees’ market in the years ahead. This is against the backdrop of a job market where around 2.4 million Malaysians could lose their jobs due to the Covid-19 crisis if movement control order is extended, according to The Malaysian Institute of Economic Research (MIER), a think tank's estimate reported in an article by freemalaysiatoday.com dated March 25, 2020.
In closing, this new normal may just be the hiring standard operating procedure (SOP) of many companies, going forward. Job hunters, forewarned is forearmed!
Disclaimer: The author is a headhunter with 17 years of industry experience and this article is the personal opinion of the author. Information contained in this article is not legal advice and is not a substitute for such advice. Photo credit: free-to-use-sounds/Unsplash.
