Money: It's not funny

To the unemployed person the unemployment rate is always 100%. And with the recent retrenchments and hiring freezes around town, the odds of finding a job are akin to winning the lottery. So despite rumours floating around town that the economy is about to pick and many firms will begin to hire once again, why is it extremely difficult for anyone to land a job? The Singapore Business Review speaks exclusively to the region’s top human resources, recruitment and consulting firms and lets you in on the truth surrounding most companies managing their headcount, the hiring trends in 2009 and where the job market intends to go this year and how you could just land that dream job.

In terms of hiring, the main difference between 2008 and 2009 is cautiousness. “Hiring activity is far more cautious in 2009 because of the economic downturn and resulting drop in business confidence levels. Managers need to plan for and justify any proposed increase in headcount which has resulted in prolonged approval processes,” says Tulika Tripathi, Managing director of Michael Page International.

Kulshaan Singh, Client & Growth Strategy Lead, Hewitt SEA agrees with Tripathi but believes that, in terms of hiring, most firms have become more stringent in their hiring process compared to last year. “In 2008 organisations were still following a wait-and-watch approach to hiring but in 2009 organisations have become even more cognizant of their workforce size with 78% of organisations having plans to control the size – the most common actions being recruitment freeze (36.7%) and headcount freeze (recruitment only for replacement) (30.6%),” explained Singh.

According to Punnet Swani, Information Product Solutions business leader for ASEAN from Mercer, a leading global provider of consulting, outsourcing and investment services, “Nearly 40% of the companies surveyed intend to impose a salary freeze for all or for only specific employee groups. Only 2% have imposed across the board salary cuts or salary cuts for specific employee groups. More than half of the organisations surveyed (56%) intend to continue giving salary increases to some or all employees.”

Perhaps the most telling answer came from Andrea Ross, Managing Director, Robert Walters Singapore, one of the world’s largest professional recruitment consultancies, who explained why financial institutions aren’t hiring like they used to. “The volumes have definitely gone down, especially within financial services. Investment banks are traditionally high volume hirers, particularly within the middle and back office due to Singapore emerging as a hub for such functions. Typical roles being hired were product control, financial control and operations. Unfortunately due to the sub prime crisis, the volumes in front office roles have vastly reduced, which resulted in the banks requiring less of such large support functions as they once did. There are still hirings emerging from product control but the product skill set is more specialised than it once was.”

“The major difference between 2008 and 2009 would be the niche roles that have materialised, specifically within the control-related areas: credit risk, quantitative analysis, compliance and audit. Credit professionals with exposure to emerging markets and cross-functional skill sets (for example, across credit analysis, documentation and risk monitoring) are particularly sought after.”

“There has also been a major shift from CPA qualified accountants to Chartered Accountants being hired within the foreign banks with a preference on overseas-educated Singaporeans,” explained Ross.

Who’s feeling most of the heat?
In a recession it’s usually only certain industries that are affected, but this recession as everyone knows is a different monster altogether with almost every industry feeling the heat. We ask our team of experts which industries are more severely affected and why.
Tripathi believes that export-driven industries are the hardest hit. “The industries hardest hit are those that are export-driven, such as electronics. The most resilient sector has been healthcare with procurement and supply chain roles also in demand because of their ability to reduce bottom line costs,” she said.

Swani on the other hand believes that it’s the hi-tech and financial industries that are feeling the brunt of the recession. “In relation to retrenchments, there are considerable differences across industry sectors, with Banking and Financial Services and Hi Tech planning more retrenchments than other industries, with almost half of the total retrenchments being reported by organisations coming from them,” said Swani.

Ross agrees with Swani in terms of the financial industries being the worst hit of the lot. “The steepest decline in hiring within financial services would be within the operations area, as the trading volumes have gone down drastically. Corporate finance activities, particularly mergers and acquisitions, have slowed down but will recover in time. They tend to be very lean teams and even more so now where there have been a number of retrenchments across financial services in the last nine months. Within Commerce and Industry, the marketing functions have slowed down, mainly due to companies slashing their budgets and focussing more on the revenue generation aspects of their business, which hasn’t been affected in the downturn.

The automobile, aviation and manufacturing (semiconductors) industries, however, have all been affected due to a steep decline in consumer spending,” she said.

Money makes the world go round
When it comes to salaries in 2009, management is the place you do not want to be in. Singh from Hewitt says that 71% of organisations in Singapore have undertaken compensation cost control measures with 43% implementing a form of salary freeze, and the lowest projected 2009 salary increase in Singapore is at the Senior Management level at 1.9% and the highest at Professional and General Staff at 2.3%.

Mercer’s Swani agrees with Singh’s sentiments explaining that although average salary increases reported by all companies, including companies implementing salary freezes, was 2.2%, the biggest drop compared to 2008 was seen at the Senior Management level.

Tripathi on the other hand said that employers are taking advantage of the hirers market by stagnating salaries due to the surplus of applicants compared to jobs. “Salaries have remained relatively stagnant so far in 2009 because of a greater supply of talent and fewer job opportunities on offer. There have been pockets of salary increases for niche skill sets but on the whole remuneration levels have remained constant,” she said.

Ross agrees with Tripathi on salaries stabilising dramatically. “Salaries have stabilised dramatically within the support functions of financial services, although within front office premium salaries will still be offered to entice talents to move over. For other niche hires in the market, candidates experienced in compliance, credit and/or product control with strong commodities background will come at a premium. These are candidates who have not necessarily been retrenched and are still in demand both locally and globally,” she said.

And on switching jobs, she says there is no better time than now to switch jobs because companies are looking to re-focus and build up their capabilities in certain areas, and waiting may make a candidate miss out on that opportunity.

“Talents will always be in demand no matter how the market is performing – and the best jobs and candidates may not be there in a few months’ time. If anything, organisations which are currently hiring externally would have secured approval from the highest authority in their management team, and that should give you the confidence that there is a definite plan and career path for the role,” she said.

All’s not lost
Thankfully, although all’s not lost when it comes to hiring trends but not so for salary increases, Tripathi believes that organisations are beginning to hire once again albeit carefully. “After a difficult 12 months in the employment market, we are seeing an emerging trend of increased hiring activity. Some companies are beginning to hire again because business conditions in their industry are improving and they do not have the staff required to capitalise on opportunities because they cut back too deeply during the downturn. Others are thinking strategically and upskilling their workforce to have the right people in the right positions ahead of the uptur n,” she said.

“Organisations are however more careful about their hiring today as each additional headcount is critical to their business, which is leaner that it was, and headcount approvals are hard to come by. As a result, we are seeing more rounds of interviews for a position to ensure all stakeholders agree on the potential hire which reduces the risk. As part of this process, reference and background checks are also more stringent.”

“In the current market there is less inclination to offer salary increases to a candidate in the mistaken belief that there will be another one out there (which is) not always the case as most organisations invest in retaining their key talent and skill sets are hard to come by.”