SINGAPORE: Amid a tight labour market, Singapore's employment rate rose to a new high in 2011, with eight in 10 Singaporeans and PRs aged 25 to 64, employed.
There were slightly more than two million residents in the labour force as at June 2011. The Manpower Ministry said total employment grew by 85,000 over the first nine months this year.
However, employers are expected to slash hiring in 2012 as they turn cautious over the uncertain economic climate.
The government has projected growth of between one and three per cent in 2012. This compares with a growth forecast of five per cent this year. Some sectors in the industry will be hit harder than others. Growth in the manufacturing, financial services and hotels and restaurants have been forecast to dip significantly.
Associate Professor Randolph Tan, head of the business programme at SIM University, said: "My own feeling is that we may not actually go into a full blown recession, instead I think that there's some indication that the economy is actually going to slow down. So we could probably be at the top end of that one to three per cent range.
"And I've actually developed a forecast, which shows that if growth is actually slow, but we don't actually go into a recession, then the economy could actually add between 70,000 and 85,000 jobs."
Some companies have started retrenching workers but the numbers remain low. Nearly 2,000 workers were made redundant in the third quarter of 2011.
What has gone up substantially is the number of workers on shorter work-week and temporary layoffs. There were 660 workers on shorter work-week and temporary layoffs in the third quarter of 2011, up from 180 in the preceding quarter.
In anticipation of more idle workers next year, the Employment and Employability Institute (e2i) is ramping up training places of up to 1,200 workers a day. This is double the number of daily training places offered during the last recession in 2009.
During the last recession in 2009, the government introduced measures such as the Jobs Credit scheme, to help companies cut costs and save jobs through cash grants.
Assoc Prof Tan said: "This time round, we can actually prepare a policy mix that would include elements of the Jobs Credit scheme, as well as CPF cuts which have been used in all of the previous recessions.
"A policy mix like that, if instituted in anticipation of the slowdown - [meaning) ahead of the slowdown instead of only when the slowdown hits, could actually introduce enough vitality into the labour market, inject it with the same type of hiring momentum that we saw in the previous downturn."
However, the employers federation feels the Jobs Credit scheme is not needed at this point. It also warned companies against relying too heavily on the government.
Stephen Lee, president of the SNEF, said: "Looking towards the government extending some help is just one area. I caution companies about developing too much of a crutch mentality that you turn too readily to the government. The government can help you lower cost, it cannot help you with the demand side. You will have to go out and search for new markets and new customers."
In view of tougher times ahead, companies have been urged to communicate more effectively with workers.
Joshua Yim, CEO of the Achieve Group, said: "That is to reassure, not on false hopes that there are no retrenchments if there is one, but telling the people very openly what are the plans moving forward when there are crises, and people will be able to understand."
There also concerns that the economic slowdown will affect productivity.
Mr Lee said: "This is an area that we have to continue to work with companies. The last recession three years ago is an interesting example. When recovery happened, we actually came back quite strongly. This is one lesson for companies, that it will be wise to use the lull period of six months or whatever to try and improve your workforce and train and continue with your productivity programmes and efforts so that when the rebound comes, you are in a good position to capitalise."
From January 2012, a new law will require employers to re-hire workers who reach the retirement age of 62.
The last Manpower Ministry survey conducted in July 2011 showed a large majority of companies have put in place measures to allow their local staff to work beyond the age of 62.
Mr Lee said: "I recalled even three years ago during the downturn, one of our fears was that whether the companies will take this opportunity to get rid of all the older workers, but it didn't happen. The retrenchments were applied similarly. The older workers and the younger workers retrenchment rates were the same. I hope this has already anchored itself and employing older workers is part and parcel of the HR policy of most companies."
In 2012, stricter salary guidelines will also be imposed for Employment Pass workers. Economists said the labour market will be put to the test next year. If the increase in restrictions against foreign manpower is going to affect local workers acquiring certain skills, then this may have an adverse effect on the economy to compete effectively.