As coronavirus batters Singapore’s economy, lost jobs loom as long-term headache
- The impact could be worse than after the 1997 Asian financial crisis, as economic restructuring reshapes industries, destroying some jobs permanently
- In Singapore, the problem is compounded by its rapidly ageing population. More than 35 per cent of its workforce is 50 and older
Philip Leong gets out of bed at 3am every morning to open his food stall in Singapore’s Jurong district. He stands for hours over a sizzling wok, whipping up more than 100 plates of fried vegetarian bee hoon, or vermicelli.
The 68-year-old has been doing this back-breaking work for nearly two decades, yet his life as a hawker was not borne of a particular passion for cooking but rather sheer necessity. In 2002, Leong lost his job as a senior engineering assistant at Singapore Technologies Engineering when the company restructured.
The 1997 Asian financial crisis had taken a devastating toll on the labour market, along with the dot-com crash and the 9/11 attacks in the United States. The effects lasted well beyond the initial drop in economic growth. Singapore lost 23,400 jobs in 1998 in its first employment contraction since the mid-80s recession. Between 1998 and 2002, only 102,000 jobs were created – just one-fifth of the 474,800 jobs created during the boom years 1993-97.
“I was already 50 years old at the time. It was going to be very difficult for me to start over again,” said Leong, whose two sons were still in primary school. He and his wife had also just collected the keys to a new apartment.
“The market was also flooded with a lot of diploma-holders. I only had an O-Level certificate. How was I going to compete with them?”
Leong was fortunate to be able to fall back on his mother’s food stall for income. Many of his peers spent years trying to re-enter the workforce while others were forced into early retirement.
“Covid-19 has been a lot more destructive than past recessions on jobs, in terms of speed and scale, and as the economy undergoes this big structural change, some jobs will be permanently lost,” said Chua Hak Bin, senior economist at Maybank Kim Eng in Singapore.
“It’s going to take a few years for jobs to shift across sectors, and for the workforce to adjust to new skills and requirements. This period of transition is going to be difficult. There’s no magic pill.”
Chua said that although Singapore’s economy could return to pre-pandemic GDP levels in two years, it may be four years before the jobs lost can be recovered.
After the 2008 global financial crisis, it took six quarters for US economic growth to return to pre-crisis levels but six years for unemployment rates to follow suit.
Well-capitalised banks, steady monetary policies and dramatic government responses to the pandemic could help cushion the blow, Chua said.
Singapore’s government is aware of the problem and has acted to shore up livelihoods, especially for mid-career workers. According to MOM data, employees aged 45-49 were the backbone of Singapore’s labour force last year, followed by those aged 40-44.
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Armed with a fiscal war chest built up over the years, Singapore has been able to roll out economic support for the short and long term. The government has shelled out nearly S$100 billion (US$102 billion) over four budgets to help businesses and workers survive the pandemic.
Policies include wage incentives for employers to hire local workers aged 40 and above, along with reskilling programmes that provide training and salary support to help rank-and-file workers find new jobs in different sectors. The government also aims to double the annual job placement of locals in their 40s and 50s to about 5,500 by 2025.
Senior Minister Tharman Shanmugaratnam, who is chairman of the National Jobs Council, last month said a national effort was needed to help middle-aged and mature Singaporean workers.
“We will spare no effort to help them carry on with their careers in the most productive jobs they can do, so that they can continue to provide for their families and contribute to Singapore,” he said.
Selena Ling, head of treasury research and strategy at OCBC Bank, said Singapore’s focus on reskilling and upskilling pre-dates Covid-19, which created greater urgency. Still, she expects more job cuts as businesses grapple with the fallout of the pandemic.
“Covid-19 is like a train wreck,” Ling said. “You’re starting to see ramifications on a lot of sectors and aspects of life that you wouldn’t have foreseen at the start. But without the government’s funding and skills support, the local job market conditions would have deteriorated much faster.”
However, government stimulus measures only go so far. The economy will need to find a new equilibrium – and that could take years. In the US, for example, job gains made over the past decade have been wiped out in six months and it could take another decade to repair the damage.
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The solution offered by governments, including Singapore’s, is to retrain workers displaced in sunset industries and move them into growth industries. The new wave of digitalisation ensures there are jobs to be filled in industries such as cybersecurity, data analytics and machine learning. However, obstacles remain, Ling said.
“The question now is this: can anyone really retrain themselves to become a cybersecurity expert, and how long a runway do they need?
“Even if they are willing to retrain, have the right attitude and aptitude, you also need employers to have an open mind. Right now, there’s still an ageist mentality among some employers. You need acceptance all around.”
The government’s tightening of the foreign worker policy could make a difference, she said, to “disincentivise firms from taking the easy way out”.
Walter Theseira, associate professor at the Singapore University of Social Sciences, said handling mid-career switches was one of the most challenging labour issues for governments anywhere in the world.
“A lot of work has to be done to link [workers] up with employers, and it may not be so easy to scale up those programmes,” he said. “The challenge also is not to find someone work, but rather to find them the same job with upwards trajectory.
“Mid-career workers need to be prepared to be flexible, and that’s one of the biggest challenges. On the one hand, they don’t want to settle for a job that’s below their pay grade because employers place a lot of emphasis on last drawn salary and position, and there’s understandable fear that future employers may use that against you.
“But workers have to balance that fear against the fact that the longer somebody is out of the market, the greater the odds they never return. A lot of them transit from unemployment to long-term unemployment, and then to being out of the labour market completely.”
In Singapore, the problem is compounded by its rapidly ageing population. Almost half the city state’s total population will be 65 years or older by 2050, according to projections from the United Nations. More than 35 per cent of its current workforce is 50 and older.
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Persuading older workers to remain in the labour force longer has been one way for ageing economies to stave off economic decline – one reason Singapore has continued to raise its retirement age. If Singapore is unable to keep its seniors in the workforce, growth could be further impaired.
In his February budget speech, Deputy Prime Minister Heng Swee Keat pledged to help mid-career workers seize job opportunities.
“I understand their anxiety,” he said. “We hope that all these initiatives will provide meaningful support to those in their 40s and 50s to further their careers with confidence.”
For Leong, the ongoing recession has been grimly reminiscent of the Asian financial crisis. His vegetarian bee hoon stall, too, has seen a dent in sales.
“Business is quieter now,” he said. “But at least I don’t have to think about starting all over again, and I can still make a living.”
