Singapore is gradually reopening its economy after two months of lockdown, but some of the jobs lost may never return as companies adapt to a “new normal” of supply chain disruptions and travel restrictions.
Prime Minister Lee Hsien Loong warns that retrenchments and unemployment will rise, and that the next few years will be difficult given the country’s heavy reliance on trade and services, such as events and hospitality. Countries will strive to become less dependent on others, and this will hurt economies like Singapore’s, which depend heavily on open borders, he added.
Whilst the Covid-19 pandemic has thrust the disruptions in the job market in the limelight, much of the seismic transformation has been taking place for some time due to increasing use of automation, machine learning and artificial intelligence. Microsoft, for example, is laying off dozens of journalists as it relies on AI to pick news and content for its various news sites.
Restrictions on movement to fight the coronavirus have accelerated the adoption of technologies such as collaboration platforms and cloud-based tools. The digitalisation of the workplace, a process people once thought would take several years to implement, is now being achieved in months.
Many observers predict a future where there will be fewer full-time jobs as companies shift to employing people on short-term contracts or for a particular task. Also, more jobs are expected to become “virtual” as physical offices become less prevalent.
In Singapore, a report we released earlier this year shows the city-state will face greater job churn in response to automation, socio-demographic changes and new business models. The government has invested heavily in training, and 77% of all Singaporeans and 81% of those most at risk of job displacement due to automation have taken measures to upgrade their skills or learn new ones. Additionally, a 2018 report by the World Economic Forum named Singapore as one of the 25 economies best positioned to benefit from the changes driven by digitalisation and automation.
Training and reskilling, however, are just one part of the equation and the financial system must evolve to provide products that will enhance the financial health of independent workers, who are more vulnerable to external shocks due to their irregular income.
In the same study, nearly half of all Singapore entrepreneurs expressed interest in financial products that would enable them to manage their cash flow in line with changes in income. Currently, these products are not widely available in Singapore.
For example, in the United States, financial technology (fintech) firms have developed savings products with features such as protection against delayed or non-payments. Gig economy workers can also access loans based on their invoicing status and past income, similar to what some small and microbusinesses enjoy. Repayments are linked to cash flows, which can vary from month to month and have a seasonal element.
Fintech firms have also joined banks as participants in the U.S. government’s Small Business Administration Paycheck Protection Program. Their inclusion in this low-interest loan and grant programme, which is designed to ensure that as many workers as possible continue to receive salaries and keep their benefits, shows the fintechs are becoming increasingly mainstream in the provision of financial services.
Similar savings and loan products such as those already available in the US, along with new retirement and insurance policies, can be developed for the Singapore market.
Singapore has a rapidly ageing workforce that needs to prepare for retirement, whilst young people in the city-state are voicing increasing concerns regarding their long-term financial health and ability to retire in comfort.
Recently, the Money Authority of Singapore (MAS) announced a $125m support package for workforce training including the Digital Acceleration Grant scheme to provide digital solutions for customers. As part of this, MAS will work with industry groups to set up a new digital self-assessment framework. Such partnerships create new opportunities for fintech and banks to reimagine new financial products by leveraging data and AI to bring a more holistic understanding of customer needs.
Helping Singaporeans stay financially healthy requires a concerted effort and collaboration by government, financial institutions and fintech, as it involves not just the development of new financial products but also accompanying regulatory support and consumer education.
As the nature of employment changes for an increasing proportion of the workforce, one thing is clear - the new normal requires a new approach to ensure sustained financial health and resiliency, especially during a time of rising uncertainty.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Steven Xavier Chan is the senior director and regional head of government relations, Asia-Pacific, for Paypal Inc. Based in Singapore, he leads government advocacy, strategy and outreach efforts in the region.
Steven has more than 20 years of combined government and industry experience in international trade and public policy. Prior to joining Paypal in August 2018, he was the managing director and regional head of regulatory, industry and government affairs for State Street’s businesses in Asia Pacific. Steven also served as Director of Government Relations and Corporate Social Responsibility for the American Chamber of Commerce in Shanghai. He previously held positions in the US government as a Foreign Services Office with the Department of State with overseas and domestic assignments in Mexico, China and Washington D.C., and as Deputy Director for China and Mongolia Affairs with the Department of Commerce.