Are we about to witness massive hiring freezes in Singapore?

Headhunters reveal the latest hiring trends underlying the unnerving 3Q jobs report.

The government has recently announced that hiring has slowed and layoffs have increased.

The number of jobs created in Q3, it said,  was 24,900 which was 21.5% lower than Q2’s +31,700 jobs, and mainly contributed by services industries. 

Jobs created in the services industries from July-Sept 2012 totaled 11,300+ but the lowest since 2Q09. This was followed by the construction sector with 9,800+ which is the highest since 4Q08 and manufacturing with 3,700+ jobs created.

For the first three quarters of 2012, net jobs created were 83, 800, which is 1.4% short of the 85,000 seen in the same period last year.

Singapore Business Review interviewed recruiting agencies if the latest jobs report is a cause for concern.

Here's what they got to say:

Pan Zaixian, General Manager, Kerry Consulting

Despite the prospect of a downward trending GDP growth, we should feel very comforted by the unemployment rate of 1.9% (as at Q3 2012) which is the lowest in the world. And with the tightening of  employment visa rules, the government is focusing domestically by directly targeting Singaporean and  resident unemployment rate (as opposed to include non-Singaporeans).

Bearing in mind that this low rate  comes at a time of global market uncertainties and the slowing growth of China, a major engine which drives
the rest of the world’s economies, this achievement stands to be admired.

Since the recovery of the markets post Gulf War and Sars in 2003, the Singapore unemployment rate has  fallen steadily from the 10-year-peak* at 4% in 2003 to 2.2% in 2008 before rising to 3.0% in 2009 at the back of the GFC. Post GFC recovery, unemployment hovers around 2.1% with the latest figure of 1.9% being a new low. 

The latest government report noted that “job creation’’ has fallen on a quarter-on-quarter basis. I see this  being contributed by lower voluntary (employee led) attrition numbers which in the first place is due to less  attractive external job opportunities in a consolidating market. Hence “job creation” ’ from replacement hires  have come down. 

A low employment rate led by low employment mobility may lead to a deflationary effect as salaries tend to stay more stagnant in a low employment mobility environment. From a headhunter’s point of view, when  people change jobs they normally move at a pay premium (anything up to +20% from current pay), and  companies tend to raise salaries of their current staff as a retention strategy.

But in a low employment mobility environment, attrition is low and salaries will tend to stay stagnant. And  companies are not motivated to increase salaries beyond the lower end of inflation rate in order to retain staff. 

 Chris Mead, Regional Director,  Hays Singapore and Malaysia

Despite the current global economic climate, we are still seeing employers continue to hire for skills in demand, although some are being cautious and taking their time to ensure they secure the right person for the right role.

According to the latest Hays Quarterly Report, many employers prefer to now offer temporary assignments, particularly in the banking sector where budgetary pressure remains. Contract or temporary assignments where budget can be taken from capital expenditure (instead of operating costs)
are seen as a good way to counter the inability to add new permanent headcount.

Employers’ expectations of candidates are high and more interviews and technical tests are being conducted in order to ensure they hire the very best of the available talent. However, as employers get more specific in their criterion during the candidate selection process, this has lengthened the recruitment process considerably.

Pang Meng Hock, Managing Director Apex Headhunters

Companies are still hiring very senior level positions in various industries in Singapore, e.g. oil and gas, retail (furniture, IT, electrical & electronics), etc.

Singapore will continue to benefit from the economic and business dynamism in this region. Our country should continue to produce internationally-minded business executives and professionals.

We should not be afraid to produce more university graduates that are well trained in all disciplines. MNCs in Asia Pacific are coming to Singapore to scout Singaporean talents. We can do regional jobs, and they always pay better than just taking care of domestic market. Our base is here, but our wings can cover the region. 

Benjamin Yang, Chief Executive Officer, Balanced Consultancy 

A couple of factors are contributing to the slower pace of hiring.

The first is in regards to the uncertain economy ahead.  With Europe looking the way it is and with the leaderships changes in the America and China, companies are hesitant to embark on aggressive growth strategies which needs to be augmented by aggressive hiring.

The second deals more towards our own internal labour policies. With the tightening of foreign labour quotas, 
firms are still in the midst of grappling and restructuring their manpower resources to optimize their cost structures to remain competitive.

The recent slowdown in hiring should not be of great concern yet. This is because this slowdown seems to be more strategic than reactive.
Firms are still biding their time to see how macro and micro factors would impact their competitiveness. Once firms can get clarity of this situation, they would be better informed and make the appropriate hiring decisions. 

Jaime Lim, Country Lead , PeopleSearch Singapore

From our perspective, hiring has continued as there are still replacement roles due to staff turnover, as well as new roles created in existing operations and new investments.

This is primarily in Finance & Banking, Chemical & Petrochemical, Healthcare & Pharmaceutical as well as Finance and HR Functions.