What slow economic growth means for HR and the workforce.
By Michael Switow
Singaporeâs economy is beginning to show signs ofÂ collateral damage from the trade war between theÂ United States and China. The manufacturing sector hasÂ been hit particularly hard, but the top line numbersÂ also belie an economic transition that is benefitingÂ modern service providers like data centres and internetÂ companies.
âIf you just look at the headline numbers, it looksÂ like slower growth, slower job creation, and fewerÂ opportunities,â says CIMB Economist Song Seng Wun.Â âThe overall labour market may be weaker, but it is notÂ across the board.â
Unemployment in Singapore has been inching upwardsÂ but the jobless rate, at 2.3 percent, is still relatively low byÂ global standards.
Singapore is one of the most open economies in theÂ world, but one-third of its exports go to China, HongÂ Kong, and the United States, leaving it particularlyÂ vulnerable to trade tensions.
The island nation barely avoided dipping into aÂ technical recession in the second quarter, growingÂ only 0.2 percent, and many analysts say that theÂ manufacturing sectorâparticularly companies in theÂ chemical, petrochemical, and semiconductor spaceâisÂ contracting.
Manufacturers are reporting their weakest hiringÂ plans in a decade, according to the ManpowerGroupâsÂ quarterly employment outlook survey. Some observersÂ see signs that more manufacturing and engineeringÂ companies are shifting out of Singapore.
For the first time in nearly two years, there areÂ fewer job openings than unemployed workers, andÂ government figures show that the âre-entryâ rate ofÂ retrenched workers has dropped sharply. On top of that,Â business confidence has hit a two-year low, according toÂ the Singapore Commercial Credit Bureau.
What does this mean for hiring and salaries in the islandÂ nation? The picture is mixed.
Professionals Are Not Immune
Retrenchments jumped in the third quarter of theÂ year, compared with the previous three months. WhatÂ is particularly striking is the type of workers that areÂ losing their jobs. The vast majority are professionals,Â managers, executives, and technicians (PMETs).
DBS Bank senior economist calls PMETs âthe newlyÂ vulnerable.â
âThis goes against conventional wisdom,â Seah says.Â âMost people assume that the lower-wage workers areÂ more prone to retrenchment, which is not the case inÂ Singapore.â
Unemployment has been inching upwards. The overallÂ jobless rate is just 2.3 percent, since more than one-thirdÂ of the workforce consists of foreign contract workersÂ and expatriates. But the citizen unemployment rate isÂ 3.3 percent.
And the tightening labour market is affectingÂ employeesâ bargaining power. âI have seen at least twoÂ cases where candidates have accepted offers of up toÂ 3000 Singapore dollars less than their previous drawnÂ salaries, simply because they are out of jobs,â saysÂ Belinder Kaur, a team manager at Hays Singapore whoÂ specialises in supply chain and logistics.
Hays Singapore also reports a growing preferenceÂ for hiring contracted workers over permanent staff,Â particularly as companies lack budgets for new hires.Â Engaging contract workers allows firms to save on costsÂ associated with benefits and mandatory retirementÂ account payments.
âI donât feel that candidates are yet affected by whatÂ they see externally,â says Michael Page Regional Director Jeffrey Ng. âThey are still quite bullish on changingÂ jobs. We are not seeing signs that they are not movingÂ because they are uncertain about the market rightÂ now.â
However, Ng says that Singaporeâs slowing economy isÂ lengthening the time required to fill vacancies. WhereasÂ in the past, a line manager in a Singapore office couldÂ make a hiring decision, many multinational firms todayÂ require candidates to also pass an interview withÂ someone in the corporate headquarters in Europe or theÂ U.S.
âCompanies want to be more sure about who theyÂ are hiring,â Ng says. âThe whole process can take anÂ extra two weeks to one month,â sometimes causingÂ candidates to lose interest in the position.
A Smart, Green Nation
Not every sector is suffering. A visit to the annualÂ Singapore FinTech Festival quickly highlights the buzzÂ surrounding finance and technology. Some 60,000Â participants from 140 countries filled the SingaporeÂ Expo, about 30 per cent more people than a year ago.
The Singapore government used the event as aÂ backdrop to announce several new initiatives, includingÂ the launch of a U.S.$2 billion green investment fund.Â The country is also offering new licenses for up toÂ five digital banks and is pumping money into digitalÂ services, artificial intelligence (AI), and other tech-enabledÂ solutions via its Smart Nation initiative.
âThatâs creating job opportunities against the backdropÂ of the strong rise in digital trade, e-commerce, andÂ internet platforms,â Song notes. âAnything to do withÂ digital, the labour market is very strong.â
Infrastructure providers like data centres as well asÂ companies that work with data analytics, monitorÂ data flows, and offer IT security are benefiting fromÂ the government initiatives and fuelling demand forÂ experts in the areas of AI, analytics, cloud computing,Â digitisation, information security, and transactionÂ platforms. Growth in the financial industry, meanwhile,Â is benefiting professionals with expertise in governanceÂ and compliance.
âIn these sectors of strong professional demand,Â Singapore is very much a candidateâs market,â saysÂ Michael Page Managing Director Nilay Khandelwal.Â âMany businesses are wisely tackling the marketÂ pressures head on by investing in crucial skill sets. ThisÂ can come in the way of hiring the right talent at a salaryÂ premium or upskilling their existing employees withÂ training and development plans.â
Professionals in these areas can command salaryÂ increments of between 10 and 15 percent whenÂ switching jobs, according to Pageâs Singapore SalaryÂ Benchmark 2020 report, which is based on more thanÂ 10,000 data points, including job advertisements andÂ placements.