Most firms will stay in business, but 1 in 5 may cut staff: Survey

Most companies believe they can keep operations going despite the pandemic, but some small and medium-sized enterprises (SMEs) expect to downsize or even fold completely, noted a new survey.

It also found that while 20 per cent of firms said they are likely to reduce staff, over 60 per cent expect to retain the same number of employees over the next year.

The survey by the Singapore Business Federation (SBF) released yesterday was conducted over two weeks last month and gathered responses from 225 companies - 83 per cent were SMEs, the rest were large enterprises.

SBF chief executive Ho Meng Kit said: "For the majority of businesses, the uncertain economic conditions remain a key concern as they continue to face challenges in sustaining their businesses, managing their manpower and coping with cash flow issues."

About 62 per cent of firms expect the uncertain climate to persist. Yet, even under these tough conditions, 87 per cent of large companies and 66 per cent of SMEs still feel they can sustain business operations, albeit with thinner profit margins or small operating losses.

But 29 per cent of SMEs and 11 per cent of large companies expect to either downsize or shut their operations entirely.

Government schemes have helped to cushion some of the blow, the firms said, but they are concerned about their ability to cope when these are withdrawn.

The survey found that 67 per cent of firms conducted a headcount review to manage business costs.

Some 62 per cent said they could maintain staff levels for the next year, but 20 per cent said they are likely to reduce headcount.

Firms that still plan to hire are more inclined to employ professionals, managers and executives, SBF found. Those that intend to reduce hiring said they are less likely to hire clerical support, service and sales workers.

Around 75 per cent of firms said they have seen a drop in productivity. While large companies are directing more resources to digitalisation, SMEs are looking at building financial resilience through restructuring their business, for instance, and innovation, besides automation.

 
 

Around 75 per cent of firms said they have seen a drop in productivity. While large companies are directing more resources to digitalisation, SMEs are looking at building financial resilience through restructuring their business, for instance, and innovation, besides automation.

Businesses looking to expand overseas are most keen to see Indonesia reopen for business travel, followed by Thailand and Vietnam.

Mr Ho said: "Businesses need to take this window of opportunity to rethink their business models and reinvent themselves to seize new opportunities and remain viable."

A version of this article appeared in the print edition of The Straits Times on September 01, 2020, with the headline 'Most firms will stay in business, but 1 in 5 may cut staff: Survey'. Print Edition | Subscribe