Take long-term approach to manpower woes amid crisis

Labour crunch could hit hard during recovery, in the light of tighter foreign labour intake

The biggest casualty of the coronavirus pandemic is the job market.

Having had their working hours cut, thousands of staff from every industry across the world have either suffered pay cuts or been forced to go on no-pay leave or laid off altogether.

As the crisis rolls on, the numbers keep rising.

While Singapore has faced numerous crises in the past, there is something ominously different about the current one. And this is demand destruction.

Singapore is a very open economy. This openness has meant that a coronavirus sneeze in China, Japan, Europe or the Americas has brought a severe cold to the Republic's economy.

The result has been a fall in demand for goods and services and disruptions to supply chains. This has forced companies to furlough staff. Furloughed staff have been forced to cut back on consumption. The cutback in consumption has further damaged domestic demand for goods and services.

A vicious downward spiral.

It is with this in mind that the Government has aggressively ratcheted up measures to help save jobs and help companies.

The Jobs Support Scheme introduced in February's Budget has been further enhanced, offsetting 75 per cent of gross monthly wages for the first $4,600 for each local employee. Foreign worker levies due this month will be waived and employers will also get levy rebates.

The job market here has also changed in many ways since 2003. Many work within a so-called gig economy, which employs thousands of mainly young people at start-ups and smallish companies servicing larger client corporations.

Many now find demand for their services unwanted. Acknowledging this, about 100,000 people will automatically benefit from the Self-Employed Person Income Relief Scheme, up from 88,000 before.

Singapore Airlines (SIA) flight crew arriving at Changi Airport Terminal 2 from London last month. SIA sees a potential recovery in six to 12 months, so it has adopted a strategy to retain its manpower talent, the writer says.
Singapore Airlines (SIA) flight crew arriving at Changi Airport Terminal 2 from London last month. SIA sees a potential recovery in six to 12 months, so it has adopted a strategy to retain its manpower talent, the writer says. ST PHOTO: GAVIN FOO

On Wednesday, the Monetary Authority of Singapore (MAS) jumped in with salary and training support for financial institutions and financial technology firms.

These measures, while necessary, may not be sufficient to help many needy workers and their families who are just one pay cheque away from financial distress.

Economists have forecast a spike in Singapore's jobless rate to 4 per cent by the third quarter, up from an average of 2.3 per cent last year.

The MAS has also warned that the job market will worsen amid a sharp drop in both economic activity and demand for goods and services at home and abroad.

"The resident unemployment rate is expected to rise and wage growth ease," it said in its monetary policy statement two weeks ago.

Many at the sharp end of the spear will be lower-and mid-level employees.

This is where employers and companies, despite the difficult circumstances they face, have an important role to play.

Just four months ago, before the coronavirus reared its head, employers were bitterly complaining about the perennial labour shortages here and the difficulties in getting workers as the Government continued to tighten foreign labour intakes. Some businesses, especially in the service and food and beverage sectors, even had to scale down because of manpower shortages.

Then came the pandemic.


Now, with demand having evaporated and their businesses shuttered, in at least the near term, some employers in the most virus-stricken sectors are shedding staff. This despite strong aid and incentives from the Government to keep jobs.

In doing so, these employers would not be oblivious to the fact that this crisis will eventually pass.

Sure, it may take three months, six months or longer. But when Singapore and the world are finally "free" of the virus, the labour crunch could hit home like a tonne of bricks. Remember, the Government's policy on tightening foreign labour remains very much intact. Some economists reckon that given the financial bazookas rolled out by governments and central banks worldwide, the post-Covid-19 economic recovery could be faster than one would dare hope for now.

Indeed, that was the case after Sars in 2003. Unemployment increased then to 4.8 per cent during the third quarter of 2003, up from 3.6 per cent the previous year. In the wake of the great financial crisis, unemployment rose to almost 3.5 per cent by the third quarter of 2009.

In both cases, the labour market tightened sharply within six months of the crises passing.

It might seem a bit inconceivable, even pointless, to some amid the current turmoil, but a recovery from the crisis could also be quick.

And businesses poised to capitalise on the recovery would be those that take a longer-term, strategic approach to their manpower issues.

Singapore Airlines (SIA) is a case in point. It sees a potential recovery in six to 12 months, so it has adopted a strategy to retain its manpower talent. It has waived its exclusive service clause for employees forced to take no-pay leave, enabling them to work elsewhere during their furlough period.

The company also opened up a portal with information on job openings elsewhere, and is also encouraging staff to contribute to the national effort to combat Covid-19 by pointing them to agencies/hospitals that need manpower.

SIA staff working elsewhere in the interim will not have their service status cut and will continue to enjoy medical benefits. And when flights resume and recovery kicks in, these staff will be redeployed in their jobs within the group.

Some larger multinationals are doing even more.

Citi Singapore has committed to give a one-off compensation of $1,200 to around 1,600 employees earning under $70,000 a year.

But one cannot fault employers that are forced to furlough staff amid the massive demand destruction that has occurred. There is no denying the pain many firms - especially small and medium-sized enterprises - feel.

But businesses should try as far as possible to hang in there, avail themselves of all the support resources - from tax rebates to rental waivers, wage subsidies and loan payment deferments - and hang on to their workers.

Those that can afford to can even use the downtime to build up staff skills or work on shelved side projects.

Having stuck together through thick and thin, workers, too, will appreciate and remember the employer's efforts to retain them. When demand returns, as it eventually will, the longer-term, strategic approach to current manpower woes will pay off.

Given Singapore's demographics and policy priorities, a tight labour market will be a permanent long-term reality.

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A version of this article appeared in the print edition of The Straits Times on April 11, 2020, with the headline Take long-term approach to manpower woes amid crisis. Subscribe