The Big Read in short: Retrenchment blues for young workers

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.

“There were some clues and indications of the game (title) slowing down but I didn't know it would have such an impact this quickly,” said Mr Tan, in his 20s, who declined to have his full name published.

“This being my first full-time job also contributed to the shock, as I wasn't sure if this was a common thing, or what would happen next,” he added.

He declined to name his employer as the layoffs are due to the studio’s plan to shut down the game title and its customers have not been informed about the development.

Like Mr Tan, one former Grab employee who spoke to TODAY recently was caught off guard when he was informed — on a weekday night while on leave — that he was among 1,000 people being made redundant.

Just last September, Mr Alex Hungate, the chief operating officer of the ride-hailing and food delivery app had told Reuters: “I know other companies have been doing mass layoffs, so we don’t see ourselves in that category”.

The retrenched employee, who declined to be named, had felt secure because after the last retrenchment round in 2020, Grab managed to avoid mass layoffs even as its competitors and other technology companies were shedding headcount. The fact that his team had been doing well in the company gave him a deeper sense of security.

“I felt like I was in the safest team, in the safest company in the industry,” said the 30-plus-year-old who had worked in Grab for “a handful of years” in a senior tech role.

“All who reached out to me (after the layoff) expressed the same ‘wow, it came out of nowhere’ sort of feeling.”

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 about to build a career or start a family.

WHY IT MATTERS

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.

Some young, former employees shared with TODAY how layoffs impacted them.

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.”

THE BIG PICTURE

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.

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.”

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.

More importantly, 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.

Experts cited various reasons for this, such as how on the job supply side, junior roles tend to be more readily available. Younger worker also tend to be more willing to reach out for help and tap one’s network to find work opportunities.

“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.

THE BOTTOMLINE

Chief economist and head of treasury research and strategy at OCBC Bank Selena Ling  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”.

Economists and business experts told TODAY that there can only be so much that can be done to save jobs or forestall retrenchments, as companies and the economy need to respond to changing market conditions.

However, to help workers, they urge the Government to continue support in retraining, skills upgrade and job matching for displaced workers, as well as helping companies in job redesign.

Providing “subsistence” for displaced workers while they retrain and job search would also be ideal, said some experts.

Meanwhile, individuals should continue to invest in themselves in terms of skills and professional network.

“While this won't entirely prevent redundancies, it broadens your choices and enhances your overall value to prospective employers,” said Mr John Doyle, associate partner at recruitment firm Page Executive Singapore.

Assoc Prof Theseira added: “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.

“Both are necessary to help workers bounce back from retrenchment.”