More Non-Residents Retrenched Amid Restructuring

Amid ongoing business restructuring, last year saw a 40 per cent jump in the number of non-resident workers retrenched, figures from the Ministry of Manpower show.

A total of 12,930 workers received the pink slip in 2014, 12 per cent higher than in the year before. This represented 6.3 lay-offs per 1,000 employees, up from 5.8 in 2013.

Last year’s higher redundancy numbers were caused by more non-resident workers being let go — 5,690 versus 4,050 in 2013. In comparison, the number of residents made redundant fell from 7,520 to 7,240.

These led to resident workers making up 56 per cent of retrenchments, the lowest since 1998 and the first dip in three years. In 2013, the proportion of resident redundancies was 65 per cent.

Resident workers laid off also found new jobs more quickly, with half of them finding new bosses within one month. The percentage of residents who re-entered the workforce within six months of redundancy also rose for the third straight quarter to 59 per cent in December last year.

The services sector — mainly wholesale trade, financial services, legal, accounting and management services, and retail trade — accounted for most of the retrenchments (56 per cent). Manufacturing as a whole made up 31 per cent of the lay-offs, while construction was responsible for the remaining 13 per cent. The increase in construction lay-offs was caused by a decline in private sector construction output.

Despite forming the majority of those retrenched, PMETs comprised a smaller share of the lay-offs last year (51 per cent) compared to 2013 (56 per cent).

The top reason cited for lay-offs was “restructuring of business processes for greater efficiency” (32 per cent), followed by “reorganisation of businesses” (24 per cent) and “poor business or business failure not due to recession” (22 per cent).

Commenting on the statistics, analysts said the higher number of retrenchments was caused by a combination of modest economic growth last year, tightened foreign labour supply and economic restructuring.

The higher Dependency Ratio Ceiling — the maximum ratio of foreign employees permitted — in the services and construction sectors led to increased redundancies, said DBS economist Irvin Seah. “The services sector finds it difficult to find more local workers to support that additional one foreign worker. As a result, companies have to downsize operations, trim their headcount and increase productivity,” he said.

Higher foreign-worker levies could have caused a shift in preference towards retaining resident workers, said UOB economist Francis Tan.

OCBC economist Selena Ling said the higher redundancies are “not too alarming for now”. “As restructuring continues, and as companies and industries try to adapt to the new normal — improving productivity and making do with less manpower — you could still get a fair bit of churn,” she said.

Noting the low unemployment rate and high re-entry rate for resident workers, she added: “If overall unemployment rate is still fairly low, then a certain amount of churn is not a bad thing because it means there is labour mobility, which is what you need for a fairly efficient, market driven economy.”

Experts said they foresee redundancies rising further in the near-term. The services and construction sectors will continue to be vulnerable this year due to weak productivity, which could affect firms’ overall business performance, said Mr Tan. “If a company in a particular sector is not seeing growth, then naturally they may shut down. Then, there will be increased redundancies,” he added.



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