The Big Read: With COVID-19 annihilating jobs, many are feeling the pain - and it will get worse
The expectation that retrenchments are likely to increase stems from the severe depth of the current recession, which is set to be longer than the ones which Singapore experienced during the Asian Financial Crisis and the Global Financial Crisis, experts say.
SINGAPORE: In May, Nicholas (not his real name), 27, received an email from the food and beverage (F&B) company where he was employed as a quality control officer. It was during the circuit breaker measures which saw many businesses stop operations, and he and his colleagues had gone on no-pay leave.
The email from the human resources department said the firm was closing down, and he was retrenched with immediate effect.
“The CEO did not even leave a word via WhatsApp,” said Nicholas. “Naturally, many outlet staff were quite upset, as they were already on no-pay leave, and were waiting for the circuit breaker to end so that they could resume working.”
As Nicholas had worked with the company for only one and a half years, he did not receive any benefits, which were granted only to those who had worked two years or longer.
Similarly, Daniel (not his real name), 26, lost his job earlier this year.
In mid-January, he had successfully completed a six-month probation period as an accounts manager at an online travel agency. But barely a few weeks later, in early February, he was called into his manager’s office.
“We all just thought (my manager) wanted to brief us on something important regarding work … none of us were suspecting anything at all,” said Daniel.
Instead, he was told that the company was “undergoing some restructuring”, and that he and several colleagues would be retrenched on the day itself. He would be paid during a one-month gardening leave, but no other benefits were offered.
“My mind just went blank and I could feel the tears almost coming out from my eyes,” he said.
Amid the current economic slump brought on by the COVID-19 pandemic, the experiences of workers like Daniel and Nicholas are not unique: Across different sectors, particularly those worst hit by the crisis, many workers are being let go abruptly and for some, in a seemingly insensitive manner.
Nevertheless, employers spoken to stressed that they had retrenched workers as a last resort, and had used unconventional methods due to the safe management measures in place.
An owner of an events company who had laid off five of his workers in early June said that he had to conduct the exercise over video-conferencing due to the restrictions under Phase One of the post-circuit breaker period.
“I was very transparent … I told them that our revenue dropped by 90 to 95 per cent.
“When I had to tell them we had to (let workers go), it was quite heartbreaking … some of the staff had been with us five, six years,” said the owner, who is in his 30s.
As COVID-19 continues to wreak havoc on economies around the world, including Singapore’s, unemployment and retrenchments on the island continued to rise in the second quarter of this year, especially in sectors hard-hit by the pandemic, such as aviation, hospitality, and F&B.
Retrenchments rose by 108 per cent to 6,700 between April and June, compared with 3,220 in the first three months of the year, according to advance estimates from the Ministry of Manpower (MOM) in July.
In his National Day Message on Aug 9, Prime Minister Lee Hsien Loong said that with business closures, retrenchments and unemployment will likely go up in the coming months.
However, he added that the Government is actively helping people find new jobs and acquire new skills, and that “employers, too, must make every effort to keep their workers, and not drop them at the first sign of trouble”.
On Monday, Deputy Prime Minister Heng Swee Keat is slated to make a ministerial statement to provide details on how the Government will continue to support workers and businesses.
Writing on Facebook earlier this week, Mr Heng gave the assurance that the Government will continue to provide targeted support to sectors that are hardest hit, including helping them “pivot to new opportunities” in growth areas.
He added: “But we are not able to sustain the same level of support indefinitely. As more sectors re-open gradually, we will have to evolve and taper the support provided.”
HOW HIGH WILL RETRENCHMENT NUMBERS RISE?
The MOM’s advance estimates for the second quarter of this year showed that both manufacturing and services sectors registered a sharp increase in retrenchments.
While manufacturing saw an increase from 720 retrenchments in the first quarter to 1,600 in the second, services saw a corresponding increase from 2,360 to 4,600.
The services sector includes industries such as retail, F&B, hotels, transport services, and recreation.
While there was relatively little news of major retrenchment exercises in Singapore in the first few months of the pandemic, the end of the circuit breaker period saw several companies - mostly from the badly impacted services sector - making headlines with their layoff announcements.
In June, ride-sharing firm Grab and edutainment centre KidZania Singapore announced that they would be retrenching staff here.
In July, Resorts World Sentosa and professional networking site LinkedIn were reported to have axed staff. This was followed by firms in the aerospace sector such as Pratt & Whitney and its majority-owned unit Eagle Services Asia laying off hundreds of their staff.
While more layoffs could be expected, especially from the hard-hit industries, the number may be lower than what some experts had earlier expected.
DBS Bank senior economist Irvin Seah, who forecasted in April that there might be 45,600 retrenchments by the end of the year, said that the retrenchments figures are likely to be mitigated by the Government’s job support measures.
They include the Job Support Scheme (JSS), which has helped to subsidise wages, thus enabling companies to retain their workers despite challenging business conditions.
But Mr Seah said it is hard to come up with an exact figure now “as the entire crisis is still continuing”.
Agreeing, OCBC bank economist Selena Ling - who had also predicted four months ago that retrenchments this year could hit 65,000 - said that aside from support such as the JSS, there have also been other “soft” measures in place that could help reduce layoffs, though it would be difficult to estimate a figure.
“There has also been a lot of moral suasion (by the authorities) that if companies really do need to lay off (workers), they should protect the Singaporean core,” she said.
Mr Seah said that the JSS’ mitigating effects will be felt differently across different industries.
He said that the scheme had helped to save jobs in the F&B and retail sectors, which were the most badly hit during the circuit breaker period. These sectors had seen a modest recovery since June when the restrictions were lifted.
“(But) there are industries where the impact of the pandemic is longer lasting, such as the hospitality and aviation industries,” he said. “In those industries, the effectiveness of the JSS is limited by its duration.”
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Under the JSS, which is scheduled to cease this month barring any extension, the Government will co-fund between 25 per cent and 75 per cent of the first S$4,600 of an employee’s gross monthly wages, with three main payouts in April, July and October.
“We should extend the JSS, but take a more targeted approach where the extension is only for certain industries that are worst hit,” Mr Seah said.
Ms Ling noted: “After August, the question is if the businesses foresee that the demand is not going to pick up significantly ... Then you may get many who will throw in the towel.”
“I think (retrenchments) are likely to increase and whether we get a surge depends on whether policymakers extend or enhance some of the current policy support,” she said.
If the measures are extended, the retrenchment numbers for the year “may be a bit lower” than her initial prediction of 65,000, she added.
The Asian Financial Crisis in 1997 and 1998 saw around 30,000 retrenchments, while the Global Financial Crisis in 2008 and 2009 claimed around 40,000 jobs.
In the first two quarters of this year, there have already been almost 10,000 retrenchments.
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IMPACT ON GIG ECONOMY
Even as retrenchment figures rise, the official numbers may still not capture the full picture since they do not include firms with fewer than 25 employees or affected workers in the gig economy, economists said.
According to MOM’s Labour Force Reports, in 2016, there were 200,100 residents who were “own account” workers.
In 2019, this had grown to 211,000, making up 8.8 per cent of the country’s labour force. Among this group, more than 80 per cent did gigs or contract work as their primary job.
However, the pandemic has dealt a fresh blow to the gig economy, said the economists. Many gig workers such as freelance performers, artists, tour guides, and private-hire drivers, have seen a drastic drop in their incomes or job opportunities drying up.
One private-hire driver, who identified himself only as Mr Ang, said that he had seen his income drop by 60 per cent from the pre-pandemic days.
He now earns about S$1,500 a month, working 12 hours daily. He is also relying on the Self-Employed Person Income Relief Scheme, where eligible self-employed workers will receive three quarterly cash payouts totalling S$9,000. He has also applied for financial support to pay for his daughter’s polytechnic fees.
“This is the only way I have in earning the little I can,” said the 56-year-old, who became a private-hire driver after he was retrenched from a manufacturing firm two years ago.
Maybank Kim Eng economist Chua Hak Bin noted that some gig economy workers, however, could still thrive during this time, such as those working in food delivery and those who can bring their expertise online, such as tuition teachers.
A DEEPER AND WIDER RECESSION
The expectation that retrenchments are likely to increase stems from the severe depth of the current recession, which is set to be longer than the ones which Singapore experienced during the Asian Financial Crisis and the Global Financial Crisis.
The Ministry of Trade and Industry (MTI) on Aug 11 said that the Singapore economy shrunk 13.2 per cent in the second quarter of the year compared with the same period last year, as the country enters its worst recession since independence.
From an initial projection that the GDP will shrink between 4 and 7 per cent, MTI downgraded its forecast to a contraction of between 5 and 7 per cent this year.
Mr Seah said: “We think that growth will only return back to positive levels from the second quarter of next year.”
He added: “Real GDP (gross domestic product) will only return to pre-COVID levels earliest by end of next year.”
This means the current economic crisis is expected to last 24 months, said Mr Seah. In comparison, the Asian Financial Crisis and the Global Financial Crisis both lasted about 18 to 19 months.
With such a long-drawn battle ahead, Dr Chua said the authorities may even have to think twice about saving some companies that may not see demand return in the next few years.
“Sectors that are hard hit such as airlines and hospitality and recreation may take three to four years to return to pre-pandemic levels.
“I don’t think it’s wise (for the authorities) to keep extending the lifelines, so we will see more companies cutting jobs,” he said.
The impact of the current recession will be deeper and wider than previous downturns, the economists reiterated.
For one, the crisis has impacted all corners of the globe, not only pushing down demand, but also affecting global supply chains, with lockdowns and travel restrictions imposed by countries around the world.
“(COVID-19) really stress-tests your entire economy in terms of its self-sufficiency in critical components,” said Ms Ling. “When the (global) supply chains break down, even if you have the demand, you won’t have the supply.”
This is unlike the Global Financial Crisis, which started in the United States’ financial sector and whose ripple effects were felt in Singapore. It is also different from the severe acute respiratory syndrome (Sars) crisis in 2003, which was largely contained within Asia.
“For this pandemic, we are all at the heart of it,” said Dr Chua.
The severity of the crisis also means that sectors which are seeing a temporary rebound - after Singapore and other countries reopened their economies - are by no means immune to layoffs.
For instance, the recent increase in demand in retail, F&B and entertainment sectors may not last if the economy continues to dive further, and people begin to tighten their belts again.
“If employment prospects continue to deteriorate, then it will have a second-order impact on domestic consumption and henceforth segments such as the F&B and retail sector,” said Mr Seah.
He noted that any sector that depends on discretionary spending could see more retrenchments in the coming months. They include entertainment and recreational services, as well as industries dealing with big-ticket items such as cars and real estate.
“People will think twice about making such purchases,” he added.
SOME SECTORS WHICH COULD BE SAFE
While the overall outlook remains bleak, economists have identified several industries that would be safe amid the pandemic. These are the biomedical and pharmaceutical industries that have seen an increase in demand in healthcare supplies, the e-commerce industry which has benefitted from safe-distancing measures, and some segments of the tech industry, as more people take their businesses and everyday activities online.
However, other industries will need to grow and adapt to the uncertainties ahead rather than wait for government support, the economists cautioned.
“Ultimately … it is the survival of the fittest, and the fittest are the ones who are able to adapt and grow,” Mr Seah said.
THE PAIN OF LOSING ONE’S JOB
Apart from Daniel and Nicholas, we spoke to five others who have lost their jobs due to the pandemic. Most of them declined to be named.
One of them, a former Pratt & Whitney worker, said the pain of getting the axe is a familiar one, as he had been retrenched five years ago from an oil and gas company.
As one of the over 400 workers retrenched on Aug 3, he said that while he understands that it was due to the pandemic, the news was “still quite painful”.
The 49-year-old, who has three sons aged between 12 and 24, said he had his family foremost in mind when he received the news.
“It’s every unemployed guy’s concern - putting food for the family on the table, but there’s nothing much we can do for now but just hope, keep looking and searching for employment,” he said.
He had been with the aerospace company for five years. Luckily, his wife works in an e-commerce firm which is an industry that is currently doing well, he said.
Nevertheless, he will be searching for jobs in the burgeoning pharmaceutical industry but may become a private-hire driver if he is unsuccessful.
Another former worker at Pratt & Whitney, who was a continuous improvement lead with the firm, said that the entire retrenchment process was done in a respectable manner and the retrenchment benefits were generous.
He said that the employees gathered at the lobby, where the general manager informed them of the company’s losses. They were then split into separate smaller groups, each led by one human resource staff, who briefed the employees on why they were retrenched and what support they would receive.
“When they briefed us, they were very sensitive about what was happening,” the 33-year-old said. “We got one month of payout for every year of service, and they even went down to two decimal points.”
Though he was retrenched on the day he was notified, he received one extra month of pay in lieu of notice, which meant that his retrenchment benefits totalled eight months’ pay, as he had been with the company for seven years.
He added that representatives from the Employment and Employability Institute (e2i) were present during the exercise to recommend alternative employment possibilities, and his manager also stayed up late to write a letter of recommendation.
NOT ALL RETRENCHMENTS WELL HANDLED
Unlike the former Pratt & Whitney employees, others who were interviewed felt that their companies could have done better with the retrenchment process.
A former project lead at a game development company, who wished to be known only as Mr Wong, said that he was notified of his retrenchment at the end of May, just four days before the exercise.
The 37-year-old received the news over a chat service that his company used as a communication channel as he was working from home. He said that he did not get any benefits although he had worked at the company for nine and a half years.
“More than four days' actual notice would've helped, although I don't know the full story behind this so I can't judge,” said Mr Wong.
For Nicholas, who was retrenched from his F&B company over email, he said that the company did not lay off workers in this manner before the pandemic.
“There was a proper notification of retrenchment and an off-boarding process. However, due to COVID-19, everyone was either working from home or on no-pay leave,” he said.
“What could have been done was to send emails and WhatsApp messages to everyone, especially the outlet staff, who did not have company email addresses.”
On the part of the employers, they said the retrenchment process has become less personal due to the COVID-19 restrictions, coupled with the growing number of retrenchment exercises which they have had to carry out.
An employer who oversees the retrenchment process at a multinational electronics firm said that human resource staff members will read out the bad news to employees via video conference while they are working from home.
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From there, the employees will have a few hours to pack up any company equipment they have with them, and a courier service will be hired to pick these up from their homes.
“In the past, the retrenched employee will get to go to the office, and someone will be there to talk to them face to face … Normally the manager will propose new openings to them,” he said.
“But in this situation, no, because everyone is running out of opportunities.”
POST-CIRCUIT BREAKER, RETRENCHED WORKERS SHOULD BE INFORMED IN-PERSON: MOM
Responding to queries, an MOM spokesperson reiterated that employers should do their part to ensure retrenchment is carried out “sensitively, and with dignity and compassion”.
“This includes the manner in which affected employees are notified and the type of support they receive thereafter,” the spokesperson said.
While the employer may contractually terminate an employee with salary-in-lieu of notice, employers are encouraged to give more notice to employees during retrenchments.
There should also be few instances where employers would need to engage security officers to escort an employee out of the work premises. “Such practices are insensitive and unwarranted,” said the spokesperson.
While the news of retrenchment had to be delivered remotely to employees during the circuit breaker, the spokesperson said that after the circuit breaker, “such news should be delivered in person, with appropriate safe distancing measures in place”.
Employers should also help affected employees look for alternative jobs. They can tap resources provided by agencies such as Workforce Singapore and e2i.
The MOM spokesperson reiterated that employers should adhere to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, which had been updated in March to provide clearer guidance on cost-saving measures and to encourage the training and upskilling of employees.
“It is imperative that employers act responsibly when taking actions that would affect an employee’s livelihood,” the spokesperson said.
“Employers who are assessed to be irresponsible or unfair in their employment practices, whether in cost-saving measures or conduct of retrenchment, may be denied future Government support or have their work pass privileges suspended.”
Singapore National Employers Federation executive director Sim Gim Guan stressed that regardless of the limitations brought about by COVID-19, retrenchments should still be the last resort.
Urging employers to conduct retrenchment exercises in a “responsible and sensitive manner”, Mr Sim said that for instance, employers should explain to affected employees the business situation faced by the company. They should also outline how the retrenchment exercise will be carried out, and specify the assistance being offered to those affected.
“(Employers) should consider its impact on both employees who are being retrenched, and those who will remain,” said Mr Sim. “This is important to manage staff morale and retain other employees.”
SUPPORT FROM UNIONS
In response to queries, National Trades Union Congress (NTUC) deputy secretary-general Cham Hui Fong pointed out that while union members in non-unionised companies can also seek help from NTUC, the advantages of being in a unionised company are “more significant”.
“The union is recognised and empowered to represent workers on employment and workplace issues, to negotiate with the companies on all industrial matters including retrenchment and retrenchment benefits,” she said.
Leaders of the unions representing workers in badly affected sectors said their unions are working with the unionised companies to minimise retrenchments and their impact on employees.
Singapore Industrial and Services Employees Union (SISEU) president Sazali Zainal said that his union will be working with unionised aerospace firms “to take necessary actions to reduce costs and save jobs, while keeping a longer-term view in terms of manpower needs”.
Mr Tan Hock Soon, general secretary of the Food, Drinks & Allied Workers Union (FDAWU), said that it is “staying closely in touch with our unionised companies to explore other cost-cutting measures before resorting to retrenchments which should only be considered as the last resort”.
For the manufacturing sector, Mr Melvin Yong, the executive secretary of the United Workers of Electronics and Electrical Industries (UWEEI), said that the union has been “working with our management partners to support companies in their hiring and training needs”.
“Additionally, for union members whose income may have dropped, for example due to a reduction in overtime earnings, UWEEI is also reaching out to assist them through the NTUC Care Fund (COVID-19), which provides eligible members cash relief of up to S$300,” said Mr Yong, who is also a Member of Parliament for Radin Mas.
Ms Cham said that should layoffs be inevitable, the unions will ensure that the selection criteria for retrenchment is fair, and they will work with companies to go through the list of retrenched workers to safeguard the Singaporean core.
The unions will also work with e2i and NTUC’s Job Security Council to plan for job placements for the retrenched workers, she added.
“While we hope to be able to resolve issues at the company and union level, we are prepared to take actions against the companies if the need arises,” Ms Cham added.
This could come in the form of industrial action, or to escalate the matter to MOM or the Industrial Arbitration Court.
HAVING LOST THEIR JOBS, SOME ARE JUST GETTING BY
Almost all the retrenched workers interviewed have yet to find full-time employment, with some working part-time to get by.
After being retrenched from a corporate role at a hotel in June, Alyssa (not her real name) has been applying “aggressively” for jobs.
The 29-year-old has gone for 10 interviews so far but has yet to be offered a job. She has applied for roles in the technology and healthcare sectors, but feels like she is “just applying for jobs which I think I am qualified to do, with no real sense of direction”.
She is currently working part-time in sales planning at a small local trading company earning S$120 a week - some 90 per cent lower than what she was earning from her previous job.
“I don't think S$120 a week is enough to get by, (but) I have savings to fall back on,” she said.
Daniel, who was retrenched from the online travel agency, has also been working part time at security firm Certis since February, where he helps to call persons under quarantine to check on their details.
He clocks in four 12-hour days a week, fetching about 80 to 90 per cent of his previous salary.
However, he knows that the role is not permanent and is looking for full-time employment.
“As long as it’s something that I think I can do and have the experience they are looking for, I just apply,” he said.
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While most of the retrenched workers interviewed started looking for jobs only after they received the pink slip, Frederick (not his real name), a senior technician from the aerospace industry, said that he began looking for alternative employment as early as March, before he was eventually retrenched in July.
Seeing the writing on the wall for his industry, he applied for various companies outside of the aerospace sector, such as in the biomedical and semiconductor fields.
In July, the 34-year-old secured a job at a local infocomm technology firm as an associate engineer, matching his previous salary.
“One of the reasons I looked for a job so early is because I don't want to place my bets on finding a job while living on the money from the retrenchment package,” said Frederick, who has a two-year-old son.
LOOKING FOR A FRESH START? HERE’S SOME HELP:
For workers who have been retrenched, there are several government grants and initiatives to help tide them over this period and find jobs.
Grants and funds
- Under the COVID-19 Support Grant, those who have experienced involuntary job loss or involuntary no-pay leave for at least three consecutive months can receive a cash grant of up to S$800 for up to three months.
- There is also the Courage Fund that lower-income households with a gross monthly income of less than or equal to S$6,200, or gross monthly per capita income of less than S$2,000, can tap on. This grants them a one-time lump sum of up to S$1,000.
More details here.
Programmes and initiatives
- SGUnited Skills Programme
Full-time training programmes that are conducted over six to 12 months, comprising courses at institutes of higher learning and by the CET Centres.
Trainees can enter workplace immersions and industry projects to apply the skills they have picked up.
They will receive a training allowance of S$1,200 a month for the duration of the programmes they are in.
More details here.
- Professional Conversion Programmes
These are targeted at professionals, managers, executives and technicians (PMETs), to undergo skills conversion to move to occupations or sectors that have good prospects and opportunities for progression.
There are two modes available for retrenched workers:
— Place-and train, where PMETs are hired by a participating employer before undergoing training to take on a new job role.
— Attach-and-train, where PMETs are provided with training and work attachments prior to job placement through industry partners in growth sectors.
More details here.
- SGUnited Mid-Career Pathways Programme
Helps workers build up industry-relevant experiences through traineeships so that they can work towards permanent jobs. Mid-career jobseekers can apply for more than 13,000 company attachments.
Attachments under this programme will be between four and nine months, with participants receiving a monthly training allowance of between S$1,400 and S$3,000, of which 80 per cent will be funded by the Government.
More details here.