Singapore gripped by employment
squeeze
Sumathi Bala
Financial Times
Singapore’s job market is looking gloomy as the global economic
slowdown takes its toll on local industries’ hiring. A recent
survey reveals that more than half of bosses are planning to cut
jobs in the first quarter of this year. A Manpower employment
outlook survey of 629 employers across seven industry sectors found
that only 8 percent intended to recruit, while 46 percent expected
to cut jobs. The rest had no plans to hire or fire, or had not made
up their minds.
Net employment outlook - the percentage of employers looking to
hire, minus those expecting a decrease in employment - now stands
at 38 percent for the January to March period, a sharp 54 percent
drop from the fourth quarter last year. Job prospects are less
bullish across Asia, according to the survey, with employers in all
eight countries polled reporting weaker hiring plans compared with
the previous quarter and a year ago.
The slowest hiring activity is expected in Singapore and Taiwan,
where negative hiring expectations are reported. Jeffrey A Joerres,
chairman and chief executive of Manpower, says that the net
employment outlooks from Singapore, India, Taiwan, Australia and
New Zealand are the weakest recorded and contrast starkly with the
previous year, when these markets “were dealing with chronic and
widespread talent shortages”. A recent Reuters poll reaffirms
Singapore’s grim outlook. The city-state is expected to be Asia’s
worst-performing economy next year, when it is likely to remain
entrenched in recession as the global downturn erodes demand for
its exports.
The poll predicts gross domestic product (GDP) will contract
1.1 percent in 2009. That marks a rapid deterioration in the
economic environment from two months ago, as the global financial
crisis has deepened. A similar poll in late September forecast 4.6
percent GDP growth.
Singapore’s bleak performance has been the result of its exposure
to the US market. The city-state became one of the earliest
casualties of the US credit meltdown in Asia, when it sank into
recession in the third quarter of 2008. Singapore’s openness to
external trade - especially its manufacturing industry, which
accounts for about a quarter of the economy - is expected to cause
more suffering this year, as the downturn in advanced economies
accelerates. Job losses in manufacturing will rise as a result,
analysts say. Local companies are beginning to feel the pinch.
Neptune Orient Lines, one of the world’s largest container
carriers, recently said it would lay off 1,000 employees or 9
percent of its workforce and issued a profit warning. In a sudden
move, DBS group, the largest bank in south-east Asia, said it would
cut 900 jobs, or 6 percent of its staff, mostly in Singapore and
Hong Kong. This, by far the biggest job cut it has made, is to
reduce costs as it tries to run a tighter ship amid a challenging
business environment. Philippe Capsie, country manager of Manpower
Singapore, says: “As the realisation of the credit crisis begins to
hit companies, employers’ hiring confidence is likewise affected.
We expect companies to monitor market developments closely before
making hiring decisions.”
He adds: “Employers are likely to place a higher emphasis on
retaining and retraining existing staff as well as paying more
attention to productivity. A number of employers will continue to
hire, but job seekers are advised to be more open-minded in their
job search and expectations.”
As lay-offs are expected to mount, Singapore’s policymakers are
urging companies to look at creative options, such as having a
shorter working week and reducing year-end bonuses. To keep workers
employable, the government has also launched a S$600m training
scheme, which gives employers more funds to retrain staff rather
than dispense with them.
The economic crunch could also affect Singapore’s reliance on
foreign workers. Lim Swee Say, secretary-general of the national
trades union congress (NTUC), speaking at a recent forum, said that
it may make more business sense to let go of foreign workers rather
than Singaporean workers if retrenchment is unavoidable for
companies.
“We’re talking about rank-and-file workers, who are, by and large,
replaceable. Our message is: give priority to the local workers.
Not only will you help minimise unemployment in Singapore, but more
importantly, it makes business sense for your company.”
Lim added that if Singaporeans are laid off, companies may find it
tough to re-employ them when the economy improves, as they will be
sought by companies that must fulfill a quota of locals before they
can hire foreigners.
At the same time, it is not lost on policymakers that foreign
workers are necessary for companies to keep costs down and to
dissuade local operators from choosing to relocate overseas.
The unemployment rate is expected to be below 3 percent with about
10,000 job losses this year. But some estimates paint a bleaker
picture, predicting that job cuts could be higher than the 30,000
seen in the 1998 Asian financial crisis.
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