Weak economy and layoffs: Bracing for a stormy ride

Weak economy and layoffs: Bracing for a stormy ride

Last Friday, Japanese online retailer Rakuten laid off about 30 Singapore workers on the fifth day of Chinese New Year. It is closing its Singapore shopping website.

Besides the shock timing - Singapore companies avoid retrenching workers during festive seasons - the mass layoffs show that the e-commerce sector, often seen as a sunrise industry, is not immune to economic restructuring.

It also re-ignites fears of more layoffs to come.

Such fears are not unfounded. The Singapore economy is in a fragile state, battered by a weak global economic outlook, the stock market dive and low oil prices.

For workers, it means that job continuity cannot be taken for granted. Local employment in sectors like manufacturing and retail trade declined last year.

While the Employment Act provides some protection for retrenched workers, it has limits.

First, the Act does not cover professionals, managers and executives (PMEs) earning more than $4,500 a month. Retrenched PMEs are left to fend for themselves.

Second, while the Act says that those who have worked for at least two years for an employer are eligible for retrenchment benefits, such benefits are not entitlements.

The amount of compensation is not fixed by law and retrenched workers, or their unions, have to thrash it out with employers. This disadvantages non-unionised workers. As it is, less than half of the local workforce is unionised.

Third, there is no law governing how layoffs are conducted. Besides avoiding festive seasons, the good-hearted bosses give ample notice and even hold job fairs.

But in Rakuten's case, the workers were told to go immediately and escorted out of the office.

Rakuten's retrenchment could be just the tip of the iceberg or the start of a wave of layoffs. Either way, given the uncertainties over the economy and jobs, workers need to know their rights and limits of the labour laws.

tohyc@sph.com.sg


This article was first published on Feb 17, 2016.
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