Singapore lay-offs may hit 100,000 in 2020, with unemployment at 4-5%

Singapore

SINGAPORE'S unemployment rate could reach around 4 per cent in 2020 as the country toils to contain the spread of the novel coronavirus with an extended circuit breaker that economists say could lead to a deeper recession.

Most of these job losses are likely to be in the retail, aviation and tourism-related industries.

In a report released on Monday, DBS Bank's senior economist Irvin Seah said overall unemployment rate could rise to 3.6 per cent, up from 2.3 per cent at end-2019, given that the economy is now expected to shrink 5.7 per cent.

OCBC chief economist Selena Ling told The Business Times that she has downgraded her unemployment forecast from a base case scenario of 3.5 per cent to exceed 4 per cent, due to the circuit breaker extension and the fact that there is no sign of a Covid-19 vaccine in sight.

Maybank economist Chua Hak Bin posted a gloomier projection, estimating that unemployment rate could go beyond 5 per cent, which is higher than the peak rates seen during the 2003 severe acute respiratory syndrome (Sars) outbreak and 2009 global financial crisis. He predicts the economy could shrink 7 per cent.

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These projections follow a four-week extension of Singapore's circuit breaker, which means non-essential businesses now have to stay closed until June 1.

While economists were in agreement that the latest measures will hit businesses hard, they were mixed on the extent to which jobs would be shed in 2020.

Mr Chua believes retrenchments could reach 150,000 to 200,000, with more than half being borne by foreigners, who will not be accounted for in the unemployment rate as they would have to leave the country.

Ms Ling said retrenchments could reach 65,000, or even 100,000 in a "more pessimistic scenario of a 5 per cent unemployment rate.

Mr Seah estimated that retrenchments could potentially rise to 45,600, nearly double his initial estimation of 24,500 from a month ago. Foreigners are likely to make up nearly 60 per cent of these job losses, he said.

He told BT that based on historical data, every time Singapore goes into recession, retrenchments exceed 20,000 but are fewer than 30,000.

This time, the government's three rescue packages, which total an unprecedented S$68.8 billion, will help to ease the "economic pain", he said, although job cuts will be inevitable.

Mr Seah said bigger companies that were able to make the transition earlier - by digitally transforming, adopting automation and reducing manpower needs - are more likely to weather the current crisis.

On the other hand, smaller companies that were slower to act will be relatively worse hit, he said. For now, they may be struggling to simply stay afloat, let alone digitalise.

"Companies may have to shed more headcount to bring manpower costs in line with the fall in earnings. In addition, some companies with weaker financial standings could go belly up," Mr Seah said.

"Many companies may crumble, and more jobs could be lost."

Recruiters told BT they have seen a roughly 10 per cent increase in job applications in recent weeks, particularly from industries that have been hit hardest by the pandemic, including retail, travel and aviation.

The positions most vulnerable to job cuts at the moment are customer-facing roles, which are at risk of being replaced by automation, as well as jobs that cannot be done remotely.

"Environments like F&B, retail, construction, where there's a limitation to how much you can transition (to a work-from-home situation), and how long you can hold on ... I think that's where you see the cuts," Jaya Dass, Randstad's managing director for Malaysia and Singapore, said.

Meanwhile, the technology sector, which was already hungry for talent even before the pandemic, are demanding more talent than ever.

Emily Tan, executive director for financial services recruitment at Kerry Consulting, estimates a 20 per cent increase in demand for tech talent, in the areas such as cybersecurity, fraud risk and fintech.

However, Ms Tan said it is much harder for employers who want to continue hiring at the moment to find "top-tier candidates", as job security is their utmost concern now.

"Those are the candidates that most firms are trying to headhunt and we are not seeing a lot of such candidates," she said.