Older Workers Most at Risk

Today ran this story on 25 April 2009:

Older workers most at risk
By Lin Yanqin with additional reporting by Teo Xuanwei

FOREIGNERS are being laid off at a much faster rate than locals, while those with tertiary education aged 40 and above are at the highest risk of being retrenched as the recession takes its toll on companies.

These trends were confirmed by the Ministry of Manpower’s (MOM) final report on labour for 2008, released on Friday.

Redundancies among foreign nationals rose 158 per cent last year, more than twice the 72 per cent rate for locals. However, locals still accounted for the majority of all redundancies, at 61 per cent.

And unlike in previous recessions when the less educated were most likely to be laid off, mature residents with tertiary qualifications were the most vulnerable group last year, “with above-average risk of retrenchment and below-average re-employment”, the report said.

The trends are likely to persist in the coming months, although much depends on how different sectors perform as the downturn pans out, economists said.

Employers will probably still lay off foreigners before locals — partly because the Government’s implementation of policies such as the Jobs Credit Scheme has “tilted the balance in favour of locals”, they said.

“The Government hasn’t sat around waiting for the numbers to show them the warning signs, so the various policies have helped partly in shielding local workers,” explained CIMB-GK economist Song Seng Wun.

But if the downturn persists and it likely will, it is only a matter of time before more locals get axed, they warned. Layoffs surged to a record quarterly high of 9,410 workers in the fourth quarter of last year, nearly triple the 3,180 layoffs in the preceding quarter. For the whole of 2008, redundancies hit 16,880 workers.

Retrenchments have not hit the highs of previous recessions in 1998 and 2001, but Manpower Minister Gan Kim Yong said the situation would likely worsen this year.

“The redundancy numbers (for Q1 2009) will be released shortly, but I think this first quarter is going to be worse than the last quarter of 2008,” he told reporters on Friday during a visit to Resorts World Sentosa.

“Given that the slowdown in the economy is going to last a while, I think the labour market will remain soft for a few quarters,” he said.

But there are still many jobs available, he stressed, citing the ramping up of recruitment by Resorts World as an example, noting that the resort operator had said it would make hiring locals its priority. And helping firms cut operating costs and encouraging locals to upgrade their skills will keep the scale of redundancies manageable, he said.

On a brighter note, seven in 10 locals retrenched in the third quarter of last year were re-employed by December, which possibly reflected the more realistic expectations of job seekers amid a weak labour market.

Not surprisingly, companies cited the recession as the top reason for laying off workers, affecting four in 10 (41 per cent) retrenched. This was followed closely by business restructuring (39 per cent), according to the MOM report.

As an Economist Intelligence Unit survey reported by Today last month showed, six in 10 companies said the slowdown offered an opportunity to streamline their businesses.

The MOM report also showed that after five years of gradually reducing their share of retrenchment, small and medium enterprises — those with 25 to 199 workers — stepped up the pace of layoffs as the recession continued to bite. They accounted for 78 per cent of the layoffs last year, up 4.1 percentage points.

After Prime Minister Lee Hsien Loong highlighted the need to increase training capacity, Mr Gan said on Friday the MOM would tweak schemes like the Skills Programme for Upgrading and Resilience to enhance their relevance and impact.

How job losses pan out this year will depend on employers’ “perception of the depth of the downturn”, Mr Song said. “Those who think a recovery is in sight ... will not retrench. But those who anticipate it will get worse will probably decide to restructure.”