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Follow UsJacqueline Wong
SINGAPORE: Alex Lee, a program manager at a plastics company in Singapore,
prefers to bring home 20 per cent less money in his pay packet than suffer the
prospect of losing his job as his firm faces hard times. Singapore's economic
woes are moving from the bottom line to the unemployment line as companies cut
production on falling demand and a technical recession looms in the second
quarter.
Lee and some 100 co-workers agreed earlier this year to a 20 per cent
"pay hold" until July, when management has promised to review the
company's and the economy's performance. More optimistic than those who have
already lost a job, he hopes a compromise in salary will smooth the bumps and
soften the surprises should the trade-driven economy go full tilt into
recession.
"Top managers have promised there will be no retrenchments and that's
definitely a better solution," said Lee, who earns about S$5,000 ($2,750) a
month and supports a family. The trade-dependent economy has not been able to
avoid a slowdown in the global technology sector nor the weakness in the United
States with both its manufacturing and exports witnessing a slump this year
along with revisions in gross domestic product (GDP) forecasts.
Jobs outlook worsens
The unemployment rate looks set to rise as manufacturing firms cut back due
to worsening business expectations and the pace of financial consolidation
quickens, analysts said. The seasonally adjusted unemployment rate was 2.4 per
cent in March against 2.9 per cent in December but the trend was likely to
reverse down in the months ahead as multinationals cut costs and continue to
shift production to cheaper centers.
Reflecting a downturn in the electronics cycle and weaker economic growth in
the United States, 3,248 workers lost their jobs in the first quarter of the
year, higher than the quarterly average of 1,900 in the previous three quarters.
About 7,000 to 8,000 workers were laid off every quarter during the Asian
economic crisis in 1997-98.
A string of technology companies such as US disk drive giant Maxtor Corp,
Japanese consumer electronics firm Aiwa Co. Ltd. and Solectron Corp. are
expected to retrench staff in the next few months. ST Microelectronics is among
those shutting two wafer foundries at the end of the month to reduce inventory
by sending about 1,600 of its 4,000 workforce on paid leave for three weeks.
Chartered Semiconductor Manufacturing, the world's third largest independent
chip foundry, reportedly plans to temporarily shut down one of its three
Singapore wafer plants next week for two weeks as orders continue to dwindle.
Financial shake-up
The cyclical impact on unemployment, yet to be fully borne out, could push
the jobless rate up to 1998 levels of nearly four per cent, said Eddie Lee, an
economist with Vickers Ballas. "Structural unemployment is not because of
the rapid pace of technology but also because we are liberalizing services,
which before this was virtually a closed sector," Lee said.
"That's causing a lot of shake-up and consolidation within the sector.
People may not get jobs in the same industry." Employment agencies agreed
that mergers and acquisitions, as well as cost cutting, would turn the heat on
job seekers, especially new graduates with little experience.
"The finance industry has been affected because of consolidation but
some clients are still putting out ads for jobs, such as for engineers," a
spokeswoman for jobstreet.com told Reuters, noting layoffs were not half as bad
as in 1998. "About 10 to 15 per cent of companies are laying off, but this
is also because some companies over-hired last year," she said.
Singapore's unemployment rate peaked at 4.3 per cent in December 1998.
"We may not hit 1998 levels because a lot depends on the electronics side,
the cycle and when the recovery comes. My suspicion is we will probably see the
unemployment rates higher than the average we had for the last decade,"
said Lee of Vickers Ballas.
(C) Reuters Limited 2001.