More workers retrenched last year as economic headwinds worsen

SINGAPORE — Reflecting the economic slowdown and challenging business climate, the number of workers retrenched by unionised companies here spiked by almost 12 per cent last year compared with the previous year. And the figure for the first three months of this year is set to significantly outstrip that in the same period last year, the National Trades Union Congress (NTUC) said today (Jan 22).
 
NTUC said 234 workers are expected to be retrenched between January and March. This figure is 31 per cent higher than the 178 workers who were displaced in the first three months of last year.
 
NTUC assistant secretary-general Cham Hui Fong said the labour movement was “not too alarmed” with the increase, as the number included those who had been informed by their companies last year as part of a phased retrenchment. “We don’t want to jump to the conclusion that we can expect a continual 30 per cent spike over the next three quarters,” said Ms Cham. 

Still, she noted that companies may put off any cost-cutting measures in the first quarter due to Chinese New Year. “But we will be on the lookout immediately after March,” she said. 

For the whole of last year, 2,512 workers from 45 unionised companies were retrenched, compared with 2,246 workers in 2014. About nine in 10 of those who were displaced from their jobs were from the manufacturing sector, which has been in the doldrums as a result of the sluggish global economy. 

NTUC said the main reasons for the retrenchment cited by firms included company restructuring, poor business and closure of operations or discontinuation of production lines.

The retrenchment figures for last year were comparable to those for 2011, when 2,635 unionised workers were retrenched. However, these figures trail the 3,833 and 7,515 seen in 2008 and 2009, respectively, when the global financial crisis was felt in full force. Still, economists said the outlook would remain bleak for the rest of this year, particularly for the manufacturing sector. 

Mizuho Bank senior economist Vishnu Varathan cited a confluence of factors — a sluggish United States recovery and more intra-eurozone trade due to a weak euro. Another, he said, is less demand from a slowing China economy, which is also moving up the value chain in manufacturing and becoming less reliant on imports.  

CIMB Private Banking economist Song Seng Wun said the manufacturing slump could have a spillover effect in other sectors. “We may see more job cuts in some of the services providers who will be affected by a downturn in demand for their services,” he said.

NTUC said it expects the labour market to “remain tight” this year. “As the global economy slows down, more businesses were impacted by related cyclical or structural challenges. Specifically, weaker sectors like marine engineering, speciality chemicals, and printing bore the brunt of these challenges. Naturally, workers were not spared,” it said. 

It added that 2,098 workers from nine companies went on shorter workweeks last year due to low business volume. This is an increase of almost 60 per cent compared with 1,323 workers from five companies in 2014. 

Workers took home a lower annual increment of 4 per cent on average last year, compared with 4.3 per cent the year before. Bonus payouts are expected to be an average of 2.98 months, a marginal increase from the 2.89 months in 2014. 

Last year, low-wage workers earning between S$1,100 and S$1,300 saw a wage increment of about 5.4 per cent. About 80 per cent of unionised companies that responded to NTUC’s survey said they have adopted the National Wages Council guidelines of paying at least S$60 built-in wage increases to workers earning S$1,100 and below.