What a year 2020 had been, with the coronavirus upending industries, supply chains and the livelihoods of many across the world. Latest forecasts by the International Monetary Fund (IMF) put the contraction in the global economy at 4.4% for 2020 while growth is expected to “remain weak for years to come,” says Kon Yin Tong, president of the Institute of Singapore Chartered Accountants (ISCA). He was speaking at the Virtual Pre-Budget 2021 Roundtable on Jan 14 organised by the institute. However, things seem to be improving as the city-state’s unemployment rate last year had — for the first time — inched down to 3.3% in November 2020 from 3.6% in October 2020.
The drop follows the close to $100 billion in rescue and support measures doled out by the government across five key instalments. A key feature was the $23.5 billion Jobs Support Scheme (JSS) where the government co-pays the wage bills of 1.9 million Singaporeans across 140,000 companies, till March. Other initiatives included rental rebates, particularly for smaller businesses, as well as grants facilitating companies’ digitalisation efforts.
Market watchers argue that these efforts have prevented a further slowdown in Singapore’s economy by giving businesses much needed support. For instance, the JSS has “helped companies avoid layoffs, unless they were absolutely necessary,” says Lam Yi Young, CEO of the Singapore Business Federation (SBF), and a panellist at ISCA’s roundtable.
Ang Yuit, vice-president of strategies, de- velopment and digitalisation at the Association of Small & Medium Enterprises (ASME), agrees. He believes that the JSS, along with other employment-inducing efforts such as SGUnited Jobs, have helped companies to expand their headcount and explore new opportunities such as digitalisation. A case in point is how retail joints that were operating primarily out of bricks-and-mortar stores began tapping on e-commerce platforms such as Lazada to reach out to a wider audience.
In addition, Ang observes that the rental relief measures applied mainly during the “circuit breaker” lockdown between April and June, had also prevented several companies from going bankrupt. This was also the case in the construction sector with companies relying on rebates for both rental and foreign worker levies, as construction works ground to halt between April to September, notes Chia Ngiang Hong, president of the Real Estate Developers’ Association of Singapore (REDAS).
What can be done?
Despite being a huge support to companies, the industry experts say these initiatives have some areas for improvement. For instance, the rental relief had only just reached most com- panies in the last few days, despite it having been applied almost a year ago, notes Ang. However, both he and REDAS’s Chia feel that there is another bigger issue: the deployment of employees. Speaking specifically on the construction and real estate sector, Chia says there is a huge gap between the number of foreign workers available and the number of projects in companies’ pipelines. “Many foreign workers have gone back and companies are waiting for new ones to come but not many have been able to come because of the movement control restrictions and the government measures on hand,” he explains. The way he sees it, one way to address it would be for a loosening in arrival of workers, just to facilitate downstream projects such as the development of HDB flats and railway lines and tracks.
Providing a macro perspective on the deployment of labour across industries, ASME’s Ang observes that there may just be a churn in the market as the existing workforce may not be able to support companies’ digitalisation efforts. This is because companies have shown a preference to hire younger, more digitally-savvy employees to lead the way, leaving behind employees with other skills. While there are initiatives incentivising the hiring of mature workers and others who have made mid-career switches, it appears that this structural issue may need more attention.
Even as the government dishes out grants and support measures, market watchers are cautious that companies may be simply adopting these for the funding. Rose Tong, executive director of the Singapore Retailers Association, notes that with grants sometimes being too prescriptive, “businesses may lose sight of their end business goals” by dovetailing to fit the requirements needed to receive the support. This artificially stifles companies and reduces their ability to think creatively and come up with business verticals, which may actually be more suited to their customers’ needs.
Ajay Sanganeria, who heads the tax department of KPMG, says it is crucial for businesses to stay relevant to their customers, especially at a time like this where there is more competition in terms of pricing and variety. What this involves is a re-learning of the needs of employees and customers that apply in the current normal. They must understand what both parties need and how suppliers can provide adequate support, adds Sanganeria.
Looking ahead, there is much uncertainty over how both the global and domestic economy will perform this year. Market watchers have pencilled 4–6% growth in Singapore’s economy, from its low base in 2020. Many say that Budget 2021 should continue to assist several sectors such as aviation, hospitality and tourism that remain in the doldrums. But, as the experts say, it must be done cautiously, to avoid companies from being “addicted to the support”.
