Will Singapore be in a recession if the downward economic trend continues? STORM talks to members of the business community for their views.The government has come out to say Singapore is not in a recession. With the economy looking shaky and the various key data on a downward trend, there is uneasiness out there.
What can businesses do when a recession is upon us? We get a view from various industry players. Please do add to the discussion with your views and comments below.
TRIM THE FAT
Ku Swee Yong, CEO, International Property Advisor (www.ipa.com.sg)
If we entered into a recession, extricating our tiny consumer market in the winds of structural changes would be extremely challenging.
Austerity measures could be severe for households, businesses and even MNCs.
As a nation, austerity measures must include an immediate reduction of government budgets such as the administrative overheads through merging a number of statutory boards, reducing the senior positions which may have led to overweight bureaucracy and getting the civil service to double its productivity within 10 years so that tax payers get more services without higher tax and excise burdens.
Dominic Goh, Manager, People First HR Consultancy (www.peoplefirst.sg)
Confronted by a recession, most companies will start swinging to crisis mode — scaling down on spending, hiring and probably to the extent of reducing headcount may be factor considered.
According to the unemployment figures have been on the rise (http://bit.ly/2auT764).
Based on my observation, there is a reduction in demand for permanent employment and slight increase in temporary and contract workers.
The ones that are hit the hardest will be the PMETs (professional, managerial, executive & technical). The demographics of this group are people aged from 38 into their 50s and employed in a particular industry for a period.
Losing a job can be catastrophic as they are often breadwinners for their families. Thus, the financial burden on their shoulders can be heavy and re-employment will be tough due to their age and salary expectation.
In the even of a recession, companies, unions, industry experts and the government should convene to look at ways and solutions that can best address the problem
LIFT THE LABOUR LEVER
Dennis Foo, Chairman, Citybar Holdings Ltd. & President, Singapore Nightlife Business Association (http://snba.org.sg)
Regardless of global economic trends, our economic policies in the last five years were largely contractionary. One of the effects is that businesses have to carry tremendous costs. An example is the levies on foreign workers.
Both local and foreign manpower costs have increased exponentially due to the labour crunch created by the foreign worker quota system.
Over and above this, the costs of space have been increasing substantially over at least a decade mainly due to the REITs (real estate investment trusts).
The 160,000 Small and Medium Enterprises SMEs that number more than 99% of our companies here and employing about 70% of our workforce are under tremendous strain.
Many have either downsized or closed down, and those SMEs that want to expand have mostly gone overseas. How then can more jobs be created locally?
When recession hits Singapore, besides other usual fiscal stimulants one of the measures we can implement is to immediately lift these ‘dampening levers’ for manpower.
Understanding the implications on government economic policy directions and the fact that our business being labour intensive, in order to weather its impact, our company had to really restructure by first delisting through a Reverse Takeover Exercise and then downsizing in order to sustain the business and wait for better times before expanding again.
REPOSITIONING THE BUSINESS
Lena Soh-Ng, Senior Partner, Huntington Communications (http://huntington.com.sg)
In a recession, funds tend to flow from advertising to public relations, as previous downturn cycles have shown. So far, revenues are up compared to 2015. This is partly due to the fact that we repositioned our business so that our communication also covers social and digital platforms.
We’re also strong in crisis communications, having won awards in this area.
Having said that, we’re addressing the issue of a soft market by being cautious on staff hires and having flexible work schemes to get experienced staff who want to work part-time.
BUILD THE TALENT BENCH
Richard Hoon, CEO, I Search Worldwide Group (www.isearchworldwide.com)
Companies anticipating a recession will generally do a few things.
They will begin to look at cutting costs to shore up their bottom line. And often the first cost is human capital. The wisdom is to differentiate between what are unnecessary expenses and necessary investments. It takes a company with guts and a longer-term perspective not to do the latter.
The correct philosophy should be this: In good times, we need good people but in bad times, we need even better people.
In a recession, companies should strengthen their bench by attracting good external talent instead of cutting back and losing good people.
Additionally, in bad times, companies may now be able to hire the type of talent that they need but could not afford or attract in good times.
So in a recession, go hunt for talent, invest in them and strengthen your talent bench!
TAPPING OVERSEAS MARKETS
Cavaliere Giovanni Viterale, General Manager, The Fullerton Hotel Singapore & The Fullerton Bay Hotel Singapore (https://fullertonhotels.com)
Our strategic business planning always takes into account the opportunities and partnerships we can tap on to increase our outreach to key target markets overseas – new and emerging markets — in tandem with industry partners like Singapore Tourism Board, Urban Renewal Authority and National Heritage Board.
This is one of the measures that also enables us to deal with the headwinds. At the same time, it complements our ongoing business practices that focus on productivity and innovation through processes that positively impact financial performance, service experience and guest loyalty.
STAND FIRM TOGETHER
Colin Goh, Executive Director, Millet Holdings (www.milletholdings.sg)
We must be prepared to close ranks and stand by our partners.
It is a time when collectively we strengthen our resolve, re-build our fundamentals and search for better opportunities together.
Even if it means searching elsewhere.
We don’t — and must never — divide, as the coming together has been a key success factor over the past few recessions: the 1998 Asian Financial Crisis; 2003 SARS crisis; and the 2008/09 Lehman brothers collapse.
A recession is never forever and we must always be prepared for peaks and troughs! Just like life!