SINGAPORE – Singapore’s trade union for employers has reminded its members to responsibly manage excess manpower and retrench workers only as a last resort.

The Singapore National Employers Federation’s (SNEF) statement on Jan 11 follows similar comments made recently by its partners in the labour movement and Government.

They come amid a resurgence in high-profile mass layoffs that hit the technology and finance sectors in recent weeks, harking back to the widespread retrenchments when the Covid-19 pandemic abated.

SNEF said the latest finalised labour data from the Ministry of Manpower for the third quarter of 2023 showed a rise in the number and incidence of retrenchments.

It also noted that retrenching employers cited reorganisation or restructuring as the main reason for retrenchments.

“Coupled with subdued external demand, increased cost pressures, and concerns of a recession, it may be necessary for some employers to make reductions to their workforce, in order to remain sustainable,” SNEF said.

Still, retrenchments should be considered as a measure of last resort, after redeploying and reskilling as many workers as possible, it said. “Employers recognise the need to take a long-term view of their manpower needs, and preserve jobs even as they transform, as this will allow them to retain capacity and capability within the organisation.”

Regional e-commerce firm Lazada is the most prominent company to have laid off workers in Singapore recently. It reportedly let go about 100 workers here between Jan 3 and 5 as part of wider plans to cut 25 per cent to 50 per cent of its South-East Asian head count.

The unionised firm drew flak from workers, the public and the Food, Drinks and Allied Workers Union over the quantum of severance payouts, treatment of affected staff, and its failure to inform the union of the exercise in advance.

Lazada operates under the Alibaba International Digital Commerce (AIDC) business unit of the Chinese tech behemoth.

The timing of the layoffs has increased speculation of an upcoming initial public offering in the United States for AIDC.

On Jan 8, San Francisco-based Unity Software, which makes software used by video game creators, outlined plans to cut 25 per cent of its workforce, or 1,800 jobs.

Unity said in November 2023 that it would shut down offices in 14 locations, including Singapore.

Amazon-owned streaming service Twitch announced on Jan 11 an exercise to cut over 500 jobs, including an undisclosed number in Singapore.

SNEF advised employers to familiarise themselves with the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, which was updated in January 2023.

The updated advisory includes a checklist to assist and guide employers in managing their excess manpower, preserving jobs and conducting retrenchment exercises responsibly, it added.

“SNEF, as a trade union of employers, can represent the interests of employers, and employers should reach out to SNEF for assistance.

“SNEF, together with our tripartite partners, stand ready to help employers implement (the tripartite advisory) and to resolve issues early and amicably.”

Retrenchment decisions are likely to be a response to the broader economic environment and specific challenges faced by individual firms, said Mr Jester Koh, associate economist at UOB.

Mr Koh added that the specific challenges are idiosyncratic in nature and depend on the firm’s business outlook, cost structure and future strategic plans.

“However, more broadly, elevated business costs could weigh on profit margins and pressure firms to reduce costs by laying off workers.”

He noted that MOM’s latest labour market data has shown that retrenchments tended to be more concentrated in externally-oriented sectors such as wholesale trade and transportation and storage, where activities have likely troughed.

He added: “Labour market conditions in these sectors could improve towards the end of 2024 as external demand picks up, alongside an expected upturn in the electronics and broader goods trade cycle.

“In addition, major central banks such as the United States’ Federal Reserve could begin lowering policy rates towards the middle of 2024, supporting consumption and investment.”