Manufacturing bears brunt of global downturn

PHOTO: The Straits Times

The sluggish global economy will continue to bite this year, with manufacturing companies bearing the brunt of the downturn, the National Trades Union Congress (NTUC) said yesterday.

Weaknesses have also shown up in the labour market, which will remain tight this year.

Unionised firms told NTUC that in the first three months this year, 234 workers - mostly from the manufacturing sector - may be laid off, a 31 per cent increase from the figure in the same period last year.

The cuts are partly due to restructuring efforts, NTUC assistant secretary-general Cham Hui Fong said in an annual press briefing on the outlook for the unionised sector.

"We have some new numbers but they are not too alarming. The economy continues to be quite subdued, hence this trend is not unexpected," she said, noting that the trend "could be cyclical" and "turn over quite quickly".

Mr Lam Joon Khoi, secretary- general of the Singapore Manufacturing Federation (SMF), said his industry is being "adversely affected by various factors, such as the manufacturing slowdown in China, high business costs and intense competition".

A better gauge of the employment situation will come after Chinese New Year, Ms Cham said.

Firms typically refrain from breaking bad news to their employees during the festive period.

But, so far, NTUC has not received "any notifications of any impending retrenchment".

Last year, 2,512 workers from unionised companies lost their jobs, up 12 per cent from 2,246 in 2014. About 93 per cent of the displaced workers were from the manufacturing sector.

Bank of America Merrill Lynch economist Chua Hak Bin said: "The job market will likely weaken, given the global slowdown. Employment growth was already tepid last year, compared with 2014.

"Manufacturing remains in recession. Services growth has been holding up but may start to slip, as China's slowdown weighs on Singapore's economy."

The electronics, construction and logistics sectors predicted a mixed to weak outlook this year.

Only four of 19 listed sectors - healthcare, security, air transport and pharmaceutical - expect to perform well.

Ms Cham said employment benefits took a slight hit last year. Despite the tight labour market, employees in unionised firms on average took home an annual pay increment of 4 per cent, a drop of 0.3 percentage points from 2014.

When it comes to bonus payouts, companies are expected to give an average of 2.98 months, up from 2.89 for 2014. For 2013, workers received a 4.63 per cent salary rise and 3.16 months' bonus.

To cope with the downturn, companies have adopted measures such as shorter work weeks and passive hiring.

"Some organisations may just be hiring to replace the numbers they lost," said Ms Cham.

Last year, 2,098 employees from nine companies went on shorter work weeks, up from 1,323 from five companies the year before.

Productivity remains a problem that the SMF wants to fix, with a new business-model innovation centre. Mr Lam said: "(Companies) must transform and focus on creating value."

Ms Cham said: "Restructuring is not taking place at the pace we would like to see. If there is no U-turn in the foreign worker policy, we hope that it will add more pressure on employers to further streamline their operations."

This article was first published on January 23, 2016. Get a copy of The Straits Times or go to for more stories.