Job market challenging, but bright spots remain

The job market in Singapore is expected to remain challenging in 2017, with employment growth likely to stay flat as companies are reluctant to hire amid a weak economic outlook.

Global uncertainties include the fallout from Britain’s decision to leave the European Union, United States President-elect Donald Trump’s pledge to scrap the Trans-Pacific Partnership, and the slowdown of the economy of China, Singapore’s largest export market. Domestically, business confidence is at its worst in a year, while consumer sentiment has fallen to levels last seen during the global financial crisis (GFC) in 2009, separate surveys have shown.

Job retrenchments will continue, hiring agencies said, albeit at a moderate pace given that Singapore companies have over the past two years adjusted to new business realities, and made strategic choices to remain competitive by sharpening their focus on value-added services and the adoption of technology.

“Depending on industry sectors, some companies would expand their staffing levels, while retrenchments are inevitable for others as they fight to contain costs. In general, employers will be more cautious with their hiring plans as they take a wait-and-see approach. Most companies would not expect to grow their headcounts,” said Ms Linda Teo, country manager at ManpowerGroup Singapore.

Based on data from the Ministry of Manpower (MOM), the number of layoffs totalled 13,730 in the first nine months of 2016, the highest since the GFC. The number of workers laid off for the full year is projected to surpass 2015’s total of 15,580 workers. Meanwhile, the mismatch between jobs and skills has also hit GFC levels, underlining the repeated calls by government and labour leaders for workers to undergo retraining.

“If Singapore sinks into a recession, workers with out-of-date skills — regardless of the industry sector they work in — will face the brunt. With the slowing economy, unemployment figures for these groups of workers are likely to rise as employers put into action cost-saving measures,” Ms Teo added.

Retail, manufacturing, banking and finance as well as the oil and gas sectors are most at risk in terms of job losses. While the surge in online shopping and reduced consumer spending have hit the retail sector hard, the banking and finance sector is facing enhanced regulatory requirements and structural industry changes, including the rise of financial technology, or fintech. The oil and gas sector is expected to stay on the back foot despite a recent stabilisation in oil prices, while manufacturing is weighed down by the wobbly export outlook.

“We don’t see any recovery at this point in time and the pain is likely to be prolonged. In many ways, the situation is much worse compared with the downturn in 2009. The recovery then was as sharp as the fall. Currently, the top-line is shaved off and there are no signs of any demand recovery,” said Mr Kurt Wee, president of the Association of Small and Medium Enterprises (ASME).

But it is not all doom and gloom. The start-up boom in Singapore is expected to propel demand for technology positions, with companies scouting for digital marketing and data analytics talent. But technology is a double-edged sword for the job market. The move towards digital strategies may lead to a diminished reliance on manpower while also allowing for exponential growth, according to Mr Michael Smith, managing director at recruitment firm Randstad for Singapore, Hong Kong, Malaysia.

“We continue to see organisations focus on how to realise this new reality while also taking advantage of the benefits that increased personalisation, artificial intelligence and machine learning can deliver over the longer term,” Mr Smith said.

New jobs are also likely to be created in the governance space, said Ms Lynne Roeder, managing director at recruitment firm Hays in Singapore. “Audit, risk and compliance professionals will be highly sought after as companies intensify their efforts to maintain a high level of control and security across their operations,” she said.

Given high rental and staffing costs, “there will be greater focus on efficiency in 2017 as companies look to attract candidates with experience in optimising supply chain and logistics flows to reduce costs,” she added, saying job market prospects would pick up in the second half of 2017.

The number of people employed, according to MOM data, fell by 2,700 in the third quarter of 2016, compared to a growth of 4,200 in the second quarter and 12,600 in the same period last year. It was the second time that quarterly employment has declined since the 2008-2009 recession.

According to ManpowerGroup’s Manpower Employment Outlook Survey for the fourth quarter of 2016, overall hiring intentions shrank for the October-to-December 2016 period. Uncertain economic prospects have also driven businesses to turn to contracting to address their additional manpower needs on a short-term basis for key projects, Mr Smith said.

As a result, Singapore employees are expected to receive the fourth-lowest pay hike in the Asia Pacific region in 2017. According to global advisory firm Willis Towers Watson’s 2016 Asia Pacific Salary Budget Planning Report, base salaries in the Republic are expected to increase 4 per cent in 2017 before factoring in inflation. Only Australia and New Zealand (3 per cent) as well as Japan (2.3 per cent) lag behind Singapore in pay increases, the report showed.

“There is no enthusiasm as such if we look at the overall jobs market here in 2017. However, the situation is not as bad as it was in 2009. The layoffs will continue as large companies wait and watch for global developments, including Mr Trump’s international policy moves, besides EU posturing post-Brexit,” said Credit Suisse economist Michael Wan.

SECTORS MOST AT RISK:

1. MANUFACTURING

The sector, accounting for a fifth of Singapore’s economy, has been hit hard by the economic slowdown and disruptive technologies, and some 23,000 jobs are forecast to be displaced by 2024, according to Boston Consulting Group (BCG). The forecast comes as employment declined in the manufacturing sector for the eighth straight quarter in the three months ended September, MOM data showed.

However, having identified advanced manufacturing as a key growth sector, the Government is stepping up investments in this space with the intention of positioning workers and companies for future requirements. Higher-value manufacturing in areas such as robotics and cloud computing will create some 22,000 jobs over the next eight years and will on average pay 50 per cent more than current jobs displaced during this period, the BCG report said.

2. RETAIL

Companies in the retail sector will be increasingly seeking individuals with e-commerce experience as consumers move away from brick-and-mortar retail outlets to online shopping, recruiters said. “There will be a growing demand for certain positions such as user experience (UX) and user interface (UI) designers, as organisations restructure their businesses to capitalise on shifting consumer behavioural trends,” said Ms Teo of ManpowerGroup. According to BMI Research, consumer spending in Singapore will rise by 4 per cent in 2017 from 3.7 per cent in 2016, largely on the back of real-wage growth even while consumer sentiment remains weak. “Despite this acceleration in consumption growth, we expect weakness in the domestic economy, declining job security and accelerating consumer prices to soften consumer sentiment over 2016 and 2017, underpinned by weak consumer confidence readings over the first half of 2016 at 33.6, the lowest reading since 2009,” said Ms Chia Shuhui, Asia Analyst at BMI in Singapore.

3. BANKING & FINANCE

As banks digitise their operations and scramble to fit services into the consumers’ mobile devices, the increased efficiency has allowed them to shed headcount. However, some roles remain in demand, such as direct sales, as well as regulatory and compliance positions.

“Banks are also on the lookout for individuals with knowledge in financial services, investigations, research background and quantitative risk experience. Newly created roles are likely to taper off as financial institutions prepare themselves for an unpredictable year ahead,” Ms Teo of ManpowerGroup said.

4. OIL & GAS

Thousands of jobs were lost in 2016 as Singapore’s oil and gas sector came to terms with the brutal reality of operating under protracted low oil prices. Keppel Corp, the world’s largest builder of offshore oil rigs, said it would increasingly look into early termination of contracts and selective retrenchment in Singapore, in line with the drop in workload. While retrenchments in the sector are likely to continue, analysts said they will be at a slower pace, especially with the stabilisation in oil prices.

BRIGHT SPOTS:

1. IT & Fintech

While Brexit has clouded the outlook for businesses, it is also opening up opportunities for Singapore to recruit talent to power its ambitious plans of becoming a leading fintech hub, Monetary Authority of Singapore’s chief fintech officer Sopnendu Mohanty said in November.

Singapore is investing in research centres dedicated to fintech and re-training people within the financial industry, as the fintech sector faces a huge talent crunch. To address the shortage, hiring managers will look at recruiting more domestic talent as well as Singaporeans returning from overseas, said Mr Toby Fowlston, MD at recruitment firm Robert Walters Southeast Asia.

“IT will experience high levels of recruitment, given the Government’s plans to boost the local start-up ecosystem. We foresee more job opportunities available for UX and UI designers, and cyber security professionals,” he added.

Mr Naveen Bhat, MD at IT security firm Ixia Asia Pacific, said: “IT will be one of the bright spots and within this area, cyber security will become a hot market. Various countries have already identified big gaps between demand and supply in the cyber security market over the next three years. Educational institutions have identified this market need and are beginning to offer specialisations in cyber security.”

2. BIOPHARMACEUTICALS & LIFE SCIENCES

Having grown to become the second-largest contributor to the Republic’s manufacturing output, the biopharmaceutical sector is expected to create more jobs in future. Employment in the sector has more than tripled, from about 1,900 in 2000 to around 6,000 in 2015, with locals representing 80 per cent of the total workforce.

The Government is working with the Workforce Development Agency (WDA) as well as the Biopharmaceutical Manufacturers Advisory Committee (BMAC) to build a talent base to meet the biomedical manufacturing industry’s growing needs, Trade and Industry Minister S Iswaran said in September.

“The Life Sciences industry also continues to mature, drawing demand for specialist sales and marketing talent to handle regional roles as well as talent to support research and development for pharmaceuticals and biotechnology given the ageing population in the region,” said Mr Smith at Randstad.