Middle-aged workers harder hit by COVID-19 downturn, economists suggest tracking 'vulnerable' group closely
SINGAPORE: Amid the rising jobless rate, middle-aged workers have been harder hit than other groups. Apart from being at greater risk of being laid off, they may also find it more difficult to secure new jobs, said economists.
According to the Ministry of Manpower's (MOM) third quarter labour market report released on Thursday (Dec 17), the unemployment rate among residents - Singaporeans and permanent residents - aged between 40 and 59 was higher and rose more steeply compared to those aged 60 and above, as well as those 30 to 39 years old.
READ: Non-residents make up 9 in 10 of total employment decline from Jan to Sep: MOM labour market report
The unemployment rate of residents aged between 40 and 49 went up by 1.3 percentage points from 3.0 per cent in June to 4.3 per cent in September. Among those aged 50 to 59, the rate increased by 0.9 percentage points to 4.6 per cent.
In comparison, the figure for those between 30 and 39 years old went up by 0.7 percentage points in the three months to 3.5 per cent in September. The rate fell by 0.3 percentage points to 4.1 per cent for those 60 and above.
Only residents aged below 30 had a higher unemployment rate, from 7.2 per cent in June to 7.9 per cent in September.
Mid-career residents also suffered from the greatest number of retrenchments among all the five age groups in the third quarter - 4.1 retrenched residents (40 to 49 years old) and 5.0 (50 to 59 years old) for every 1,000 employed residents.
This is in contrast to a rate of 2.7 (below 30 years old), 3.7 (30 to 39 years old) and 3.7 (60 and above).
Economists said middle-aged workers are often more at risk of getting laid off during a downturn as they command higher wages than those older and younger than them, making them likelier targets for cost-cutting measures.
The unemployment rate is also higher because they tend to take more time to find a suitable job. They would need one that meets their experience level and salary expectations, especially as they bear the burden of household obligations such as mortgages, their parents’ healthcare costs and children’s education expenses, observers added.
“And it’s not easy in such challenging economic climate, to find a job that would pay just as much as your previous job,” said DBS economist Irvin Seah, who called this group a “vulnerable segment” of workers whom policymakers should shift their focus to.
“It’s not just simply about finding employment again. It’s about whether the employment is about to cover your monthly expenditure … especially if you have a family to feed.”
They could also be more likely to occupy jobs at risk of technological or business disruption, or have more financial resources to take more time to job-hunt, said labour economist Walter Theseira, who is an associate professor at the Singapore University of Social Sciences.
Mr Seah said the unemployment rate among middle-aged workers will probably show an increase in fourth quarter figures and remain elevated until the middle of next year after company earnings improve, which then encourages hiring managers to expand their headcount.
The observers said these numbers should be closely tracked. If the labour situation does not change, it could result in long-term joblessness and difficulties for households.
“(It’ll) definitely be a worrying trend,” said Mr Seah. “Workers who have been unemployed for too long will eventually get discouraged.”
It becomes more difficult for these workers to get hired the longer they have been out of work, he said. “(Their) mindset will deteriorate (and) employers will also look at them in a less positive light.”
Dr Theseira said the concern is not whether these middle-aged workers are able to find a job, but whether they can secure one with decent prospects.
“The problem will be that if middle-aged workers are not able to find good career options, their families are likely to suffer significant drops in their standard of living or they may face significant harm to their financial security for retirement,” he said.
“If they can't return to a career with good income and progression prospects, we could expect that social support for their dependents would need to improve,” he added.
The COVID-19 pandemic and its impact on the faster pace of digitalisation could lead to fewer job opportunities in the new normal, as software and robots take over jobs once done by humans, said CIMB Private Banking economist Song Seng Wun. Companies would also want a tech-savvy workforce that can handle these tools.
Then there is the bias against older workers - that they are “dinosaurs” not open to change - that could cause some business owners to prefer younger job seekers to older ones, he added, making it harder for middle-aged workers to get re-hired.
There are schemes targeted at helping this segment of workers, the analysts noted. These include mid-career conversion programmes, subsidised training initiatives, career advisory services and rules against age discrimination.
Other measures recently put in place to encourage businesses to hire local workers and from the older age groups include wage grants and curbing the inflow of foreign workers.
“It’s always a case of whether (businesses) can continue to be incentivised and (on) the other side, to what extent (the worker) who is looking is willing to switch,” Mr Song said.
The question is how to sharpen these measures, the economists added.
Pointing to the Jobs Growth Incentive, a wage subsidy scheme where the Government co-pays a local hire’s salary - 25 per cent for those under 40; 50 per cent for those 40 and above - Mr Seah said the Government should fund up to 75 per cent for low-wage workers 40 and older so that employers turn to them instead of falling back on foreign labour.
READ: Singapore’s labour market could bottom out by end-2020, but uneven recovery may widen income gap: Analysts
As Singapore further reopens its economy, observers said the Government should now focus on identifying segments of the population that are facing difficulties finding re-employment.
MOM said on Thursday that it will pay attention to the long-term unemployment rate - residents unemployed for at least 25 weeks - which crept up by 0.1 percentage point to 0.9 per cent in September.
“We can't wait for the problem to manifest itself before we work on it. Now is the time to start,” Mr Seah said.