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SINGAPORE: Amid the current economic downturn, one service sector is reporting good business. Companies offering outplacement services said they are seeing a phenomenal growth in cases, as businesses begin downsizing.
As the economy takes a tumble, companies – not just those within the financial services sector – are cutting back on salaries and even headcount.
Layoffs are reported in industries as diverse as manufacturing, pharmaceuticals and shipping, and although no one is safe, it seems middle and upper management staff are bearing the brunt of the displacements.
One outplacement company, which helps retrenched workers find new jobs, said it has seen a four- to five-fold increase in cases compared to a year ago. Another told Channel NewsAsia that it has seen a 20 per cent rise in the number of cases, compared to a year ago.
Ruby Chen, managing director, DBM, said: "It always starts at the regional offices and then it spreads down to the country level. But we're seeing it across industry, across levels."
"Rightly or wrongly, when it comes to the crunch, many companies take the easiest way out which is to reduce payroll and of course, that means headcount reduction," said Paul Heng, managing director, Next Career Consulting Group Asia.
The latest labour market report by the Manpower Ministry showed that retrenchment numbers are down in the second quarter of this year, compared to the first quarter. After rising for two consecutive quarters, the number of retrenched workers fell to 1,798 in Q2 2008 from 2,274 in Q1 2008.
But human resource experts and Singapore's labour movement expect the numbers to go up due to the fact that the full impact of the current downturn has not hit the job market.
The National Trade Union Congress (NTUC) said some 3,000 unionised workers may be laid off this year. This is about the same as last year's figure of 2,943, but NTUC said "retrenchment may rise probably next year when business continues to deteriorate".
In fact, a recent survey of 218 companies by the Singapore Human Resource Institute and Remuneration Data Specialists showed that 11 per cent of companies polled said they have laid off workers or are planning for a retrenchment exercise this year. This figure is significantly higher than the 2 per cent forecasted six months ago.
Ronnie Tan, managing director, Right Management, said: "The writing on the wall has been freezing of salaries, hiring freeze, so normally these are the tell-tale signs leading to eventual restructuring or retrenchment."
If that is not bad enough, HR experts said finding re-employment for retrenched workers is also getting tougher as jobs are hard to come by.
Ms Chen said: "If you're looking at the financial services industry, obviously there are not a lot of jobs there. There's more displacement than hiring and the future is not that bright at the moment.
"Of course, expectations have to be adjusted, financial services pay very well in the good times, so you might have to consider a pay cut. From one industry to the next, the pay packages can be vastly different and people got to acknowledge that."
As for workers, HR experts said the best way you can protect yourself is to maintain your networks, upgrade your skills and review your strengths to match your company's needs.
NTUC said there could be temporary layoffs or shorter work weeks to tide over this difficult period. It added that companies should also make use of the downturn to upgrade the skills of workers, so that they will be more prepared to bounce back when the economy recovers.
Mr Heng said companies undergoing a restructuring exercise need to be mindful of open communication with staff.
"It's the responsibility of the company to keep the employees updated. In case they need to introduce measures such as pay freeze, pay cut or bonus freeze or whatever, the people will hopefully understand," he said.
Right Management's Mr Tan added: "The good news is, we are also getting more enquiries on not only how to treat these people right when they are leaving the organisation, but companies are also thinking of how to handle their staff morale better, how to be much more selective in terms of who to let go and who they should keep, so that they are better equipped with the talent needed going into 2009."
On a separate note, DBM said the current downturn may lead to the market adjusting escalating pay packages, as well as rising office rentals.
Ms Chen said: "We've got to a point in Singapore that there was a talent crunch – there were too many jobs and not enough people, salaries have gone through the roof, and the cost of employment, retention, was just escalating.
"So if you can call it a silver lining, it would be that the market will correct itself in terms of salary costs. And with some businesses downsizing or ceasing operations, rentals will eventually have to come down because there would be office space available."
- CNA/so
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