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Hiring sentiment takes a knock in poll of 3,600 SMEs
HIRING sentiment has fallen the most steeply among Singapore's small and medium-sized enterprises (SMEs), which are dialling down their business expectations for the next six months amid a dimmer global outlook, a survey has found.
In the index drawn up from a quarterly poll by the Singapore Business Federation (SBF) and consumer credit reporting company Experian, expectations declined quarter on quarter for all the seven measures on which firms were surveyed: turnover, profitability, business expansion, capital investment, hiring, access to financing and capacity utilisation.
But hiring expectations slid the most, slumping 1.74 per cent on quarter.
The hiring outlook in five of six sectors dimmed; the exception was construction and engineering, which improved on other fronts as well, likely due to strong public sector construction activities, said SBF and Experian, citing projects such as the Tuas mega port and the expansion of the integrated resorts.
The cautious hiring sentiment comes as the Ministry of Manpower's latest labour market report shows resident unemployment rates inching up and job openings declining.
SMEs contribute to 65 per cent of Singapore's employment, noted the Department of Statistics.
Market watchers say the sentiment has not translated into action yet, but may do so if the heat is turned up.
Kurt Wee, president of the Association of Small and Medium Enterprises (ASME), asked whether businesses are freezing hiring or laying off staff, said: "Although there's a lot of caution, we're not seeing major alarm bells yet."
The Singapore Chinese Chamber of Commerce & Industry, in a recent poll of over 900 companies, found that most said they were retaining their present employees. Only 17 per cent said they would cut back on manpower.
But if trade pressure increases in the next two quarters, firms may rein in hiring, said Mr Wee, noting that businesses' toplines have already been affected by weaker markets.
Maybank Kim Eng's economist Chua Hak Bin told Today newspaper last week that how the job market will fare in the coming quarters will depend on the US-China trade negotiations.
"Retrenchments could rise if the trade war continues to escalate, and the manufacturing recession deepens," he said.
Mr Wee said SMEs are less likely to fire their staff, as they have come through a phase of tightening of their pool of workers in recent years and are generally leaner.
Aside from pausing hiring, firms may instead offer lower salaries to new hires, he said.
Singapore University of Social Sciences' economist Walter Theseira agreed retrenchment is usually the last resort as replacing headcount is not easy. Companies could cut employees' work hours or avoid hiring.
Mr Wee said that businesses in frontline sectors such as manufacturing and logistics would be hit first, followed by those in the services sector.
Overall, the SBF-Experian SME Index fell to 50.6 in the latest quarter, from 50.8 the quarter before, reversing the uptrend in the last quarter.
A reading above 50 indicates that companies expect business to improve in the next six months; a reading below 50 indicates that they expect lower business activity.
A joint initiative of the SBF and Experian, the latest edition surveyed more than 3,600 SMEs from July 8 to Aug 16 on their expectations for October 2019 till March next year.
SBF chief executive officer Ho Meng Kit said: "The government has reassured our companies and Singaporeans that they are ready to step in to boost the economy, if needed.
"We're seeing government spending on infrastructure and that's a good start, but I think our businesses, too, can play a part."