Singapore has weathered economic storms in the past, but signs are pointing to this downturn being different. On top of cyclical headwinds, technological disruptions and fundamental changes in consumption patterns are challenging industries across the board. Consequently, companies may have to respond in new - perhaps even contrarian - ways to see off the dark clouds. For example, instead of shedding scarce manpower, firms could harness it better for new growth opportunities. At the moment, the former is more visible than the latter in some sectors.
The number of employees made redundant in the first three-quarters of this year is already 33 per cent higher than in the same period last year, according to the latest statistics from the Ministry of Manpower. Little relief is expected in the last three months of the year. Over the last few years, redundancies - comprising permanent workers who are retrenched and contract workers whose arrangements are terminated prematurely - have peaked in the fourth quarter of each year. If this trend continues, the rate of redundancies for the full year is likely to hit a seven-year high.
The reflexive action of a business to cut staff costs could reflect a process of regrouping in order to surge ahead in a fresh direction. In other cases, it could be symptomatic of the lack of a viable plan of action for the future. But companies working together to effect industry transformation might think twice about taking a blunt approach to human resource management. For example, moving into new markets with inexperienced or untested teams would be akin to fielding sports newbies when playing in the big league. Instead, there's merit in leveraging existing competencies and group dynamics to acquire new skills identified by industry transformation maps.
Employers should also consider the fact that retrenchments which are perceived as opportunistic or indiscriminate could adversely affect workplace morale and make it harder for them to retain valuable talent. Viewing human capital as a scarce resource is a better premise for strategic planning, given the reduced numbers of new entrants to the workforce, arising from lower birth rates and a recalibration of foreign labour inputs. With the demand shifting to higher skills, sourcing capable and committed workers will not be as easy as it was when the economy operated at lower levels of sophistication.
On their part, Singapore workers should set their sights on being part of industry transformation efforts by working with employers, unions and supporting agencies to actively retool themselves for the future. Ultimately, the ability of management and workers alike to pull together to exploit new opportunities will make a crucial difference in all sectors as the operating environment gets tougher.