Sunday 20 March 2016

Can Singapore households weather slowing growth in 2016?

In the last of our two-week series on the economy, The Straits Times looks at the impact of a slowing economy on households. So far, households have been holding up but things could get worse if retrenchments start to pile up, report Rachel Au-Yong, Priscilla Goy and Wong Shiying.
By Rachel Au-Yong, Priscilla Goy and Wong Shiying, The Straits Times, 18 Mar 2016

With fewer clients using her contractor husband's renovation services, commodity specialist Wong C.K., 41, and her family have had to make swift decisions to cope with a smaller budget.

The family income has shrunk by more than half - from $11,500 to $5,500 - after her husband's business fell by about 70 per cent since 2014.

Seized by fear, he would sit in silence for more than an hour, worrying about the future, especially for his...
Posted by The Straits Times on Thursday, March 17, 2016

Their 10-year-old daughter now goes for group tuition, instead of more costly private sessions, saving them $250 a month.

They will also opt for staycations in Sentosa, instead of their usual jaunts to Japan or South Korea for the annual family holiday.

"We still have some savings to lean back on, but this is not sustainable. We will give up the car if my husband cannot find a different job in the next two months," she told The Straits Times.

With the economy set to grow at a modest 1 to 3 per cent this year, economists and MPs expect to see tougher times ahead, with many companies likely to see weaker profits or even losses as demand starts to dry up.

But for now, at least, households are likely to be sheltered from the heavy storms, supported by a tight labour market, strong wage growth that has bolstered savings over the past few years.

As Nee Soon GRC MP Lee Bee Wah puts it: "Families are coping for now, but they are probably more cautious in spending."

"The economy is undergoing a cyclical downturn and it is likely to impact businesses and their bottomlines," said Holland-Bukit Timah GRC MP Liang Eng Hwa, who chairs the Government Parliamentary Committee for Finance.

But the relief could be temporary, especially if things turn much worse and retrenchments start to pile up.

"With shrinking business orders, many companies are, understandably, on cost-reduction mode. The indicator to watch is job losses," said Mr Liang.

Last year, layoffs hit a six-year high, with the economy shedding about 15,580 workers, and the fear among observers is that this could snowball this year.

So far, there have been several high-profile retrenchment exercises. In February, Japanese online retailer Rakuten and media company Yahoo axed a number of staff. Foreign bank Barclays also cut about 70 jobs here in January.

Among the most vulnerable are also likely to be the most educated with professionals, managers, executives and technicians (PMETs) particularly at risk.

This group formed 71 per cent of the 15,580 Singaporeans and permanent residents who lost their jobs last year, up from 66 per cent the year before.

This is disproportionately higher than their 54 per cent share of the resident workforce last year.

Job recruitment firms have also noticed a sudden surge in the number of applications - a sign that more people are in need of employment.

For example, Kelly Services Singapore has had about 10 per cent more applications from last December to this February, compared to the same period the year before.

At Human Capital Singapore, director David Ang said there were over 600 applications for nine job postings since January, but only 460 applications for the same number of job postings during a 10-month period from March last year.

"People need to moderate their expectations," he said, noting that there are also fewer vacancies in some sectors now.

These include industries like oil and gas, construction, electronic manufacturing, shipping and commercial banking.

The bigger worry is that workers who have been retrenched may not be able to find their way back to a job quickly.

A 50-year-old offshore engineer retrenched last July, who wanted to be known only as Mr Heng, said he now has more time to spend with his three teenage children, but worries about financing big-ticket items.

He and his bank officer wife have "more or less" paid up for their three-bedroom condominium in the east, "but there will come a time when we need to look at our funds, and see if there's enough to send our kids to university, and for retirement".

"At my age and in my industry, though, it is hard," he said.

The Government has recognised the problem and pushed hard for the national SkillsFuture movement, which hopes to promote lifelong learning and help workers stay relevant and competitive.

The results, however, may take years to manifest.

"For now, we need to look into what, and how, workers should specialise more deeply in their skills and find jobs," said labour MP Desmond Choo, who is also MP of Tampines GRC. "Middle-aged and mature workers might face challenges trying to find jobs even after re-training. A stronger push for place-and-train programmes might be what these workers find useful."

Another labour MP and an MP for Tanjong Pagar GRC, Mr Melvin Yong, pointed out that jobs are still available but the challenge is with job-matching.

"With better coordination, we can increase awareness of where the available jobs are, " he said.

Although all seven MPs The Straits Times spoke to said there has not been a significant spike in the number of residents asking for financial assistance, they are also wary of an impending recession, and whether sufficient measures are in place to help them.

"The people who will be hardest hit are those who have been retrenched and still have significant loan repayment obligations, like homes," said Choa Chu Kang GRC MP Yee Chia Hsing.

"Prevention is better than cure, so we need the economy to grow. As such, we must be careful that we do not overtighten foreign labour supply."

Ms Lee is also hoping that the Budget rolls out measures to help households cope with the slowdown, for instance, vouchers to offset the cost of public utilities.

For some workers like Madam Sally Ho, 35, the key to surviving a slowdown is dialling down her expectations.

She left her bank officer job last year to join a medical solutions company. Though she took a 50 per cent paycut, the new job is less demanding on time as a mother of two.

"It means eating out less, and not feeling envious when your former colleagues go on expensive holidays or buy a new bag," she said. "If you can do that, life may be a little tough, but overall, still fulfilling."

Hit by layoffs, some middle-aged executives are seen as too costly for their previous companies to retain, and supposedly too old for new employers to hire.
Posted by The Straits Times on Monday, March 21, 2016

Still looking for work 6 months after losing job
By Jeremy Koh, The Straits Times, 18 Mar 2016

After he heard the dreaded news in 2014 that the plant he was working in will be closed down, Mr Chua G.C., as he prefers to be known, put on a brave front at home, keeping the news from his wife and child.

But the anxiety would creep up and paralyse him in the middle of a meal.

Seized by fear, he would sit in silence for more than an hour, worrying about the future, especially for his school-going children, now aged 18 and 15.

The manufacturing company will completely shut its operations later this year and Mr Chua will be without a job for the first time since he started working.

Worse, he is worried he will not be able to get another job paying equivalent pay, given his age.

Mr Chua, who has a degree in chemical engineering from the National University of Singapore and has worked in the plastics industry for over 20 years, was a manager at a plastic production firm earning between $8,000 and $10,000 a month.

He has not received a single firm offer since he started sending out resumes in October last year.

"I'm not very hopeful about (my) job prospects due to the economic slowdown. I'm just hoping that from June, the economy will be better," said Mr Chua, who is in his late 40s.

And even though his wife continues to work, earning about $6,000 on average a month, the family has had to cut down on their expenses.

The family eats out less, spends less on luxury goods, and is not thinking of going for a holiday any time soon. Mr Chua said they have managed to save about $1,000 a month this way.

For the short term, he is open to jobs offering between $2,000 and $4,000 a month but is hoping to get one that pays more than $4,000 a month for the long term.

"I just want to finish my next job peacefully and see my children through their education, that's all I'm looking for," he said. "It's very stressful not be able to find a job these six months. It's especially so for mature workers who have a home, a car loan to service, children who are still going to school, maybe parents who are sick.

"Imagine you are already 45 and you go for an interview just like a fresh grad and you need to go and sell yourself, the feeling is not nice."

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