Restructuring leaves its mark on layoffs

Trend likely to continue in government's push for productivity-driven growth

[SINGAPORE] Singapore's economic restructuring - now in its fifth year - is starting to leave a more visible mark on the labour market.

The share of layoffs that were due to the restructuring of business processes rose for a third year in a row in 2013. And the proportion of layoffs due to higher costs - stemming in part from higher wages - also crept higher last year, the Ministry of Manpower (MOM) said in its annual report on layoffs, released yesterday.

Making work processes more efficient, the top reason companies cited for retrenching or prematurely releasing contract workers from 2010-2013, affected 40 per cent of the workers laid off last year, up from 37 per cent in 2012. It had accounted for 23 per cent of layoffs in 2010, when the government first laid out its roadmap for restructuring.

And, higher operating and labour costs, in part due to deliberate policies to encourage more productive use of land and labour, affected three in 10 workers made redundant last year - higher than the proportion in 2012.

Economists say that restructuring's mark on the labour market may deepen in coming years, given the Singapore government's commitment to push the economy to productivity-driven growth - backed by multiple rounds of levy hikes and quota cuts to slow foreign manpower growth.

"Singapore is still in the early stages of restructuring, and I think the share of layoffs due to this will continue to rise," said UOB economist Francis Tan.

Standard Chartered economist Jeff Ng agreed that restructuring's impact will continue to show up in layoff numbers.

"Restructuring remains a multi-year effort and medium-term process," he said. "Given that skills training and upgrading takes time, it may take years for the full impact to materialise."

But the impact from higher costs may be more muted this year.

"We see costs pass through from businesses to consumers as the economic outlook improves. This will likely help to sustain margins that were eroded by rising costs," he added.

An improved growth outlook also means that the labour market will continue to stay tight - as demand stays high and supply of workers continues to be limited, said Mr Tan. The unemployment rate - which averaged 2.8 per cent for residents last year - is thus likely to stay low this year.

Mr Ng also noted that only a small minority of workers laid off in 2013, had been laid off before, and that most residents who found new employment went to a different industry. "Concerns should only arise if any of these factors deteriorate significantly," he said.

Although 11,560 workers were laid off last year, an increase from 11,010 in 2012, the total pool of workers had grown too, so the incidence of redundancy remained unchanged from 2012 - 5.8 in 1,000 workers were laid off in 2013.

Robert Walters Singapore's managing director Toby Fowlston thinks the redundancy rate is unlikely to rise. "We see an increase in volume of jobs as Singapore clearly remains a key economic hub and there is still plenty of hiring activity. The job market continues to be candidate-driven," he said.

Certain groups of workers were still more vulnerable to layoffs than others. MOM said that manufacturing workers were most affected, with 13 in every 1,000 employees made redundant in 2013, up from 10 per thousand in 2012.

PMETs (professionals, managers, executives and technicians) were also more vulnerable to redundancy than those holding production or clerical, sales and service jobs. PMETs made up 66 per cent of residents who were laid off, even though they made up only 52 per cent of the workforce in 2013.

"This possibly reflected the growing vulnerability of mid-level, white-collar workers to job losses due to globalisation and technological innovations. Despite this, the unemployment rate of PMETs remained lower than other occupations," the MOM report said.

Recruitment consultancy Kelly Services' vice-president and country general manager Mark Hall observed that some PMETs were "more choosy" than they ought to be, while Randstad's Singapore country director Michael Smith thinks retrenched PMETs may need to be more flexible about the jobs they seek and manage their salary expectations.

Yesterday, Acting Manpower Minister Tan Chuan-Jin said at MOM's annual work plan seminar that CaliberLink, a career services centre for PMEs, has assisted more than 5,000 workers - 750 of whom found jobs - since March 2011.

The minister also stressed that restructuring for higher productivity must continue, even as the government is mindful of the need to strike a balance between protecting workers and maintaining Singapore's competitiveness.

"We understand that many companies are feeling the strain of our foreign manpower tightening measures. During this period of economic restructuring, we are committed to helping employers, especially smaller companies which don't always have the flexibility and scope to make some of these changes," he said, citing schemes to support investment in technology, streamline processes and subsidise training for workers.

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