Consumer confidence hits seven-year low – what’s next for Singapore’s job market?
A consumer confidence index compiled by MasterCard has revealed a plunging drop in the first half of 2016. The latest result of 33.6 is the lowest since 2009 and represents a 10.8% fall on the previous six months. It seems fears over quality of life, income and job security have left Singaporeans pessimistic about the future of the economy and the labour market.
But what exactly has caused this downturn in mood and how does the city state expect to revive confidence levels in the jobs market in the second half of the year?
Ongoing pressure over job security
One reason Singaporeans might attribute to their confidence slump is a shift in balance when it comes to permanent employment. In the financial industry, a recent report revealed a high demand for interim managers.
The report, from recruitment firm Robert Half, cited business continuity, leadership enhancement and changes in management as incentives to hire an interim manager. While this may be efficient and cost-effective for business heads, this type of flexible resourcing is a worry when it comes to job stability and the long-term prospects of those looking for more permanent employment.
What’s more, those who have a permanent job may find it to be not so permanent after all, as even the biggest firms show signs of downsizing or relocating due to wider economic concern.
Barclays announced in early September that it would be cutting around 100 jobs from its IT department in Singapore. The cuts follow the closure of Barclay’s cash equities operations across Asia as it seeks to reduce headcount globally.
Elsewhere in Singapore’s job market, sentiment among small and medium enterprises (SMEs) has also fallen. The most recent report from the SBF-DP SME Index, the measure of business confidence that looks ahead over a six-month period, revealed muted opinion and pessimism with regard to profit outlook.
The CEO of The Singapore Business Federation, Ho Meng Kit, even went as far as urging SMEs to look overseas for prosperity, or face “a long period of low growth or even declining profitability”.
Fresh support for employees
It is clearly a worrying time for the business sector in Singapore and by extension, the job market. But there is some positive news emerging from the doom and gloom, beginning with the announcement that next year Singapore’s Ministry of Manpower is to establish an employment claims tribunal to hear salary-related disputes.
The tribunal aims to take over from the labour courts, where the majority of salary-related claims are currently heard, and will aim to provide resolution for employees covered under the Employment Act who earn up to S$4,500 per month.
Although the new tribunal is not set to start operating until April 2017, the promise of a new dispute resolution service will be uplifting for many citizens whose fears over job security and salary issues may be denting their confidence.
Elsewhere, career development programmes are starting to emerge — perhaps an attempt to curb job market woes spurred by low birth rates of the past few decades and the impending retirement of the baby boomer age. In the hotel sector, two schemes have been launched by the Ministry of Manpower.
One focuses on helping workers obtain specific skills to further their careers, while the other is known as the Professional Conversion Programme (PCP) and aims to help executives transition more smoothly between multiple industries. The PCP is already available in 12 industries, such as manufacturing, infocomm, healthcare, early education and social services.
There are also calls for a little perspective. While there has admittedly been an increase in redundancies, Singapore’s unemployment rate of three per cent is still comparatively low.
The rate, which grew 0.3% on the previous quarter, has been exacerbated by the slowing economy and cautious hiring as a result of global uncertainty.
While the rise of unemployment sparked concern when it emerged in the second quarter, economists have urged that it is too soon to say the labour market is slacking — particularly considering that the news of a fall comes after four quarters of near continuous labour market growth.
The drop in confidence suggests consumers will remain cautious — something visible in the decline in attendance at this year’s Singapore Grand Prix.
There is also further risk that this weakness may spill over into domestic activity, causing more accentuated and consecutive tumult for the labour market. Growth forecasts have already been lowered for the year, with estimations now at around 1.8%.
That represents the slowest pace since 2009. This is why all eyes will be on both the public and private sectors of Singapore for the rest of the year to see how the pessimism plaguing the nation is curbed, to try to encourage a rosier conclusion to the year.