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The Big Read: Young, retrenched and ready to start over — a new norm for workers in a more volatile economy?

SINGAPORE — As a fresh polytechnic graduate, retrenchment was the last thing on Mr Y C Tan’s mind when he first started work as a junior game designer. But barely 15 months into the job, he was among three in four employees let go by the studio in June.

Meanwhile, global chipmaker Micron announced in February that it was going to cut 15 per cent of its workforce this year globally, a larger figure than the 10 per cent had initially announced in late December. The company reportedly had 10,000 employees in Singapore as of December.

Individuals like Mr Tan and the former Grab staff member are among many young workers whose lives have been disrupted by these recent spate of layoffs, at a time when they are building a career or starting a family.

Mr Lee Yun-Han, director for human capital consulting at professional services firm Deloitte Southeast Asia, said: “While younger workers may possess more up-to-date skills, they may still face challenges due to competition among peers and specific industry dynamics.

“The impact on younger workers is concerning, as their employment prospects and income earning ability play a significant role in overall societal well-being.”

While retrenchment numbers in Singapore are relatively low, they have been on the rise in recent months. Quarterly layoffs here last peaked at 9,120 less than three years ago, in the third quarter of 2020 amid the Covid-19 pandemic.

The number of workers made redundant has been going up for three straight quarters, coming in at 3,820 in the first three months of 2023, according to the Ministry of Manpower’s (MOM) latest labour market report.

The report also showed that among resident workers, the incidence of retrenchment per 1,000 employees rose the highest over the quarter period for younger workers, reaching closer to that of their older counterparts.

For example, the number jumped from 0.8 in the last quarter of 2022 to 2.2 in the first quarter of this year for workers below the age of 30, and from 1.2 to 2.0 for employees aged between 30 and 39. In comparison, retrenchment incidence among workers aged 50 to 59 remained the same at 2.3.

While historical numbers show that retrenchments typically peak during recessions — with many years or even a decade in between each — business and human resource experts were hesitant to conclude that business cycles are now getting shorter.

The recent layoffs, they noted, were largely confined to a few sectors, namely electronics manufacturing, information and communications, and financial services. Within these industries, while some companies may have done multiple rounds of reducing headcount due to specific challenges, there is little data to definitively show how widespread this practice is.

As to why a larger proportion of younger workers seem to be affected in recent layoffs, analysts attributed this to the concentration of younger employees in such companies and industries, rather than any vulnerability due to their age.

ARE RETRENCHMENTS BECOMING MORE FREQUENT?

Chief economist and head of treasury research and strategy at OCBC Bank Selena Ling said that retrenchments in general are “largely correlated to the business cycles”.

A business or economic cycle refers to the fluctuations in economic growth, with its stages constituting of expansion, peak, contraction, and trough.

“In the past, the pattern was roughly a recession every decade. For example, there was the Asian Financial Crisis of 1997. And then around 2008, the Global Financial Crisis struck,” she said.

Based on MOM’s data, peaks in retrenchment numbers were indeed observed around those periods of time.

Singapore saw some 7,600 to almost 9,000 retrenchments per quarter in 1998, totalling 32,800 for the whole year.

Following the Global Financial Crisis, the annual retrenchments for 2008 and 2009 were 16,880 and 23,430 respectively, with the highest quarterly layoffs happening in the first three months of 2009 at 12,760.Despite the multiple rounds of layoffs carried out by some high-profile companies since the start of the pandemic, analysts cautioned against prematurely inferring that business cycles are indeed becoming shorter.

Associate Professor Walter Theseira, a labour economist from the Singapore University of Social Sciences (SUSS), said: “The incidence of retrenchments is still significantly below that of past serious shocks such as the Global Financial Crisis and might be considered to be only slightly above the ‘normal’ level of retrenchments.”

Agreeing, independent economist Song Seng Wun said: “We are still watching it as it happens.”

“We don’t know for sure if indeed the cycle is getting shorter or a case of what we’re currently seeing is the ongoing post-Covid shift in the consumption of goods and services,” said Mr Song, who was previously with CIMB Private Banking.

However, Mr Adrian Choo, chief executive of recruitment firm Career Agility International, believes that retrenchments now “are no longer necessarily tied to recession cycles”.

Instead, they may be due to rapidly changing technology or shifting of customer demand for products, which may sometimes result in the company closing entire business units and setting up new ones, he said. 

The recent spikes in retrenchment numbers could be driven by different forces.

Mr Linus Choo, executive director of recruitment firm Ethos BeathChapman Asia, said that the high rate of retrenchment in late 2020 was “largely due to cost pressures brought on by Covid-19’s disruption to businesses” he said.

“(Retrenchments from the) second quarter of 2022 onwards may squarely be pinned to the past quarter of interest rate hikes by the United States Federal Reserve, knock-on effect brought about by failures of some large financial institutions, and the war in Ukraine that has driven the cost of raw materials and commodities up.”

Some experts such as Mr Alex Holmes, a senior economist at Oxford Economics, also noted that the recent retrenchments were mainly conducted by a few specific industries.

Though given that Singapore is “a very externally focused economy”, he expects more jobs to be affected as “exports soften and global growth fades”.

According to latest figures, Singapore’s non-oil domestic exports contracted for the eighth consecutive month in May, falling by 14.7 per cent.

“So at the moment, (retrenchment) is very narrow-based in certain industries… But I wouldn’t be surprised if it does start to widen over the coming months and quarters,” Mr Holmes said.

Mr Mark Teoh, organisation transformation leader at Deloitte Southeast Asia, added that companies may go through multiple rounds of layoffs instead of conducting a one-off exercise due to evolving business needs, market conditions, and restructuring efforts.

“It allows them to adjust their workforce gradually and align resources with changing priorities,” said Mr Teoh.

Mr Goh Jia Yong, people advisory services partner at professional services firm EY, noted that the industries driving the retrenchments “are observed to generally have good age and generational diversity”.

“Retrenchment efforts within these sectors will affect both younger and mature workers alike,” he added.

Independent human resource analyst Adrian Tan said that company might choose to axe its older workers who tend to hold more senior positions and cost more on the payroll.

However, when entire departments or units get shut down due to “a business pivot”, then “young or old, (there’s) no discrimination” in layoffs, he added.

Companies in Singapore are obligated to inform MOM when carrying out retrenchment exercises.

MOM did not respond to TODAY’s queries on the number of firms which have conducted more than one round of layoffs since the pandemic, or whether the number of companies executing multiple rounds of retrenchments has increased over the years.  

‘WHY ME?’ EX-EMPLOYEE WONDERED

An engineer in his 20s, who gave his first name as Muhammad, was made redundant this year during his company’s retrenchment exercise, less than a year into the job — his first since graduating from university last year.

Though he had tried to brace himself as best as he could for D-Day, as the impending layoffs were “announced beforehand”, he still felt the shock when the moment arrived.

“I was pretty much at a loss for words and was just trying to mentally calm myself down,” he said.

“Questions like ‘why me?’ ran through my mind, but I couldn’t bring myself to ask them. Perhaps because I knew they wouldn’t give a proper answer anyway.”

Meanwhile at job portal company Indeed.com, Mr Syukri Azman said there was already some writing on the wall — in the form of a hiring freeze from last November and growing chatter about “some reorganisation happening” — which left the staff simmering in uncertainty for months until the axe actually fell in March.

“But throughout the entire period, nobody knew (for certain). Even the regional senior directors had no idea,” said the 29-year-old, who was working in a training and people development role there for about 15 months.

Those who spoke to TODAY said they received severance packages that were largely tied to the length of their tenure in the company.

For the retrenched engineer Muhammad, this allowed him to take up courses and focus on his job search without worrying about having to take on a part-time job, as the severance package he received could have tied him over for “a few months at least”.

He managed to secure a new job in the same industry “within three to five months” of his retrenchment. 

As for Mr Syukri, having been in the workforce for about eight years, he took a three-month break from active job applications to pursue side gigs that he enjoyed, including working on his own lifestyle content creation channel, Syukeats.

More importantly, he also spent the time carefully thinking about his next career steps while speaking with people in the industries he was interested in to better position himself during job applications.

After about two weeks of actively sending out resumes, he landed five job interviews, said Mr Syukri.

Not all could afford to take a breather after retrenchment, though.

For one work pass holder who wanted to be identified only as Daisy, she had to urgently find a new job after getting laid off, despite being given two months’ pay worth of ex-gratia payment.

As her work pass was terminated along with her employment, she had only one month to find work before she had to leave Singapore.

“I could not fully focus on job applications only, as I also had to make preparations to leave Singapore such as packing my belongings, informing my landlord and buying an air ticket to fly back home should I fail to get another job,” said the former fintech employee in her 20s who hails from China.

Within the span of a week, she managed to send out over 50 job applications. Most went unanswered save for three, which she applied with the recommendation of her friends.

She is thankful that she eventually did not have to leave Singapore as she managed to find a job in the services industry. However that is unrelated to her qualification and experience, and she had to take a 10 per cent pay cut.

BOUNCING BACK FASTER

Experts noted how younger workers are getting back on their feet relatively more quickly than their older counterparts.

Among retrenched residents, 83.9 per cent under the age of 30 found new jobs within six months of being laid off. The proportion is 77.9 per cent for those between 30 and 39, 59.6 per cent for those aged 40 to 49, and 49.4 per cent for workers aged 50 to 59.

“High re-entry rates for younger retrenched workers is a feature that predates the current tech industry cycle,” said Assoc Prof Theseira. At the same time, the figures also showed why retrenchment of older workers is “a large policy concern”, he added.

Multiple factors contribute to the high re-entry rates, said experts.

One, while some companies reduce headcount for business or strategic reasons, this does not mean that the skill sets that their ex-workers possess are any less desirable. One example is the tech sector which is generally dominated by younger workers.

Mr John Doyle, associate partner at Page Executive Singapore, said: “While it’s challenging to assert that hiring is matching the pace of layoffs, there are undoubtedly companies capitalising on the robust talent pool currently in the market.

“This creates an opportunity for sectors that previously struggled to compete with the allure of tech giants like the FANGs, to acquire the talent they critically need,” he added, referring to the commonly used acronym for Facebook, Amazon, Netflix and Google.

More broadly, on the job supply side, junior roles tend to be more readily available, said Mr Adrian Choo of Career Agility International.

“On the workers’ end, younger workers — given their relatively shorter working experience —  tend to command comparatively lower pay, thus making them less expensive to hire from a prospective employer’s point of view,” he said.

Mr Adrian Tan the human resource analyst added that younger workers may also be more willing to take pay cuts since they typically have fewer obligations than older workers.

And a willingness to reach out for help and tap one’s network to find work opportunities play a part too, he added.

“Older folks are more face conscious, whereas younger people will #opentowork for the world to know,” said Mr Tan, referring to a hashtag commonly used on LinkedIn by users to indicate that they are searching for work opportunities.

SUSS’ Assoc Prof Theseira said that the bottom line in job search and hiring is that employers must want to hire the person, but the latter must also be willing to seek out and accept employment offers.

However, he added that older workers generally suffer on both ends, as they are in less broad demand, and are also generally less willing to accept a wide range of employment opportunities.

“This is largely driven by the greater specialisation of older workers, which both narrows the potential opportunities that use that level of skills or experience, and also reduces their willingness to accept or search for opportunities outside their specialisation,” Assoc Prof Theseira said.

He added that the fewer available senior positions that fit their specialisation, experience and pay expectations, further compound the difficulties in them getting rehired.

In response to TODAY’s queries, the National Trades Union Congress (NTUC) said that NTUC and unions “stand ready to help workers in preserving jobs and ensuring that retrenchments at unionised companies are conducted in a fair and objective manner”.

NTUC will continue to support workers — including younger workers — in training and placement, as well as in  job-matching, career guidance and skills upgrading services, it added.

HOW TO BEST HELP FUTURE WORKERS

Ms Ling of OCBC said that companies hiring and firing more quickly in response to market conditions “is not necessarily a negative thing, because if firms are more agile, they may be better positioned to survive the challenging times”.

However, she acknowledged that such a situation would be “unsettling from the worker’s perspective”.

Asked if anything could be done on a national level to protect jobs in the face of more dynamic economic and business conditions, Mr Song the economist said that jobs can only be protected for so long.

“If you protect a job for one generation, you’re only buying time for the present,” he said, adding that business entities and economies would still need to keep up with market changes or risk losing out.

Mr Adrian Tan noted some economies may have stricter labour regulations that make it harder for companies to retrench workers. While it may make firms more prudent in hiring to avoid having to let go excess workforce, it may be taken to the extreme, reducing opportunities for full-time employment.

He added that it is “definitely good to have some form of financial subsistence” for workers, given the fast changing environment and how workers would need time to pick up meaningful skills in between jobs.

The Government has recently announced that it is examining such a support scheme to help workers get re-employed, albeit in a “targeted” manner.

Other experts said continued governmental support in retraining, skills upgrade and job matching for displaced workers, as well as helping companies in job redesign, would go a long way in helping workers in general.

In the meantime, Mr Teoh of Deloitte said that companies need to be more “flat and fluid” to enable “rapid reconfiguration of roles and jobs to dynamically meet changing business needs and available workforce skill sets.”

On the individual level, workers can help themselves by keeping an eye on market and business trends so they can keep themselves constantly updated with relevant skills.

“While this won’t entirely prevent redundancies, it broadens your choices and enhances your overall value to prospective employers,” said Mr Doyle of Page Executive.

Besides acquiring skills, individuals need to better understand how to apply them in jobs that are not related to their career path, before they get retrenched, said Mr Lee of Deloitte.

“This requires moving from a mindset of a career ‘ladder’ to a career ‘lattice’, where an individual’s career can move in multiple directions where the relevant skills can be applied effectively,” he added. 

Experts and retrenched employees alike noted the importance of tapping one’s professional network to improve one’s chances of getting rehired.

“Having a combination of individual resilience — that is, having savings to tide over, updated industry networks and skills, and so on — and societal resilience policy — that provides income support and training and job search support — is vital,” said Assoc Prof Theseira.

Young workers who have been retrenched told TODAY that while a natural instinct is to want to urgently get employed again, if one can afford to, it is equally important to take the opportunity to take stock of one’s career plans and work on skills that can contribute towards that plan.

Mr Syukri said that the three-month break from active applications allowed him to spend time speaking to people in the industries that he was interested in.

“Now when I go into the interviews, I feel that the kind of language I’ll be speaking, things that I talk about, will very much set me aside from just another candidate applying for the sake of applying a job,” he said.

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