Singapore: Unemployment and Retrenchment in 2Q 2021

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A peek into the advanced release of the Labor Market Report by Singapore’s Ministry of Manpower (MOM) has offered some insight to employment growth in the second quarter of 2021. As of now, estimates show that there is an increase of resident employment growth. However, it is expanding at a declining growth rate.  

Phase 2 (Heightened Alert) as an impact 

From 16 May to 13 June 2021, Singapore reverted to Phase 2 (Heightened Alert) restrictions due to new clusters of COVID-19 infections. Inevitably, tightened measures have its impact on businesses and declines are reflected in sectors directly affected by the reversion such as the food and beverage as well as retail trade industries. Non-resident employment also continues its downward trend due to on-going travel and border restrictions, causing the total employment excluding Migrant Domestic Workers to decline overall in 2Q 2021.  

Looking forward, MOM permanent secretary Aubeck Kam also mentioned that the reimposition of Phase 2 (Heightened Alert) in late July 2021 might potentially weaken the labor market in the third quarter of 2021 as well. 

Unemployment rates ease up 
Positively, the unemployment rate is observed to be moving in a stable fashion as it eased further in June 2021.  

  • Overall unemployment rate: 2.8% to 2.7% 
  • Resident unemployment rate: 3.8% to 3.7% 
  • Citizen unemployment rate: 4.0% to 3.8% 

From 95,500 unemployed residents in March, the figure has decreased to 86,600 in June. Though the unemployment rate is not back to pre-Covid levels, this stability is a positive sign of recovery. 

Retrenchment rates rose in 2Q 2021 
Retrenchment rates were observed to have increased slightly in 2Q. Based on MOM’s survey, about 2,500 retrenchments happened in 2Q, compared to 2,270 in the previous quarter. The rise was attributed to layoffs in the manufacturing and construction sectors. Services sector still takes a large slice of the pie but has since improved from the previous quarter (1,500 from 1,930). Despite the slight uptick, the retrenchment numbers are still observed to stay within pre-pandemic levels. 

The Labor Market Report 2Q 2021 will be released in mid-September 2021, where a fuller picture of the labor market specific to sector breakdowns will be observed. Stay tuned to our news page as we continue to bring you updates on the labor market across Singapore, Hong Kong, China and Malaysia. 
 

This article is written with reference to: 

https://stats.mom.gov.sg/iMAS_PdfLibrary/mrsd-LMAR-Q2-2021.pdf

https://www.businesstimes.com.sg/government-economy/singapores-total-employment-down-in-q2-on-covid-19-curbs-but-unemployment-rates

Vaccination & The Rights of An Employee: A Look at China & Singapore

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The pandemic has been going on for a while now, and with new variants, stronger and more infectious than ever, there seems to be no return to full normalcy in sight. Fortunately, the push for vaccinations around various (mostly) developed countries around the world has given the government and corporations an avenue to get the economy back in session again. Legislations constantly evolve to determine the boundaries of business activity one is allowed to carry out, including whether the working population is to resume working from home. These limits are based on vaccination rates as well as perceived severity of the on-going pandemic, which begs the question: to what extent does the company have control over the employee’s medical history, and whether vaccination status would affect employability and ability to carry out work? Questions like “Can employers force employees to get vaccinated?” would be asked. Let Link Compliance guide you through a short analysis of labor laws in China and Singapore, and the perspectives as a result.  

China  

Vaccination is voluntary on an individual basis in China. However, those in high-risk professions would be required to get vaccinated, such as frontline medical staff. Still, would employers be able to retrench someone on the basis that they chose not to get vaccinated?  

The short answer is: No. 

China is well-known for its strict laws on termination of labor contracts, and termination on the basis of lack of vaccination would be easily disregarded and thrown out. In scenarios such as having 99% of other employees already being vaccinated, terminating the 1% of employees who out of personal or medical reasons could not be vaccinated would be unlawful, and firms would be subjected to heavy penalties for breaking labor laws. In other scenarios, such as being frontline medical staff or air travel where being fully vaccinated is the only feasible way to carry out work without causing covid-19 clusters, then a refusal to cooperate and get vaccinated would be seen as deliberately going against company regulations as well as endangering other people. Employers would be entirely justified in terminating labor contracts with such employees. 

Singapore 

Singapore’s approach in regards to covid-19 and vaccination and the workplace are based on this: the onus falls on the employers to take measures that ensures the health and safety of their employees to the greatest possible extent, all while vaccination is voluntary on an individual basis. Thus, employers have to make sure frontline medical staff, with close and frequent contact with covid-19 patients, are sufficiently vaccinated before they can carry out their work to the greatest degree of safety possible. Meanwhile for other sectors, for example the tech sector where remote working is still in place, employers do not have the right to force an individual to take up vaccination. While employers may strongly encourage employees to disclose their vaccination status, employers will have to note that they have no legal grounds to do so. However, work arrangements such as allowing only fully vaccinated employees to physically return to the workplace does not fall under discrimination, as employers would simply be looking out for the health of their employees the best as they could in this case. Tracking of vaccination records per employee will also have to follow PDPA (Personal Data Protection Act), which means additional administrative hassle. In short, though nothing is legally enforced, employers still have a certain degree of power and responsibility, such as preventing non-vaccinated employees from returning to the workplace until it is deemed to be safe enough to do so, or being able to request employees to declare their vaccination status. 

All in all, it is clear that while vaccinations are voluntary, both countries have their own ways and reasoning in how they handle covid-19 and the workplace. Employers would have to be aware of local laws and regulations in the actions they could take in regards to the vaccination of employees or the lack thereof, and consulting legal advice on what they are and not allowed to do would never hurt. In general, it is also advised that an individual should go for vaccination if medically possible, as an act of personal responsibility in this pandemic.
 

Articles referenced: 

http://www.gov.cn/banshi/2005-05/25/content_905.htm  

https://www.sohu.com/a/470930194_121119529

https://www.mom.gov.sg/covid-19/advisory-on-covid-19-vaccination-in-employment-settings

https://www.straitstimes.com/singapore/singapore-employers-cannot-require-staff-to-disclose-covid-19-vaccination-status

Increased Importance on China’s Electronic Labor Contracts

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The covid-19 pandemic has accelerated certain developments in laws across countries all over the world. The need for social distancing and the need to reduce spreading has resulted in work from home arrangements, and this means that for some stepping into a new job, procedures such as the signing of labor contracts would have to take place online, hence the rise in need and usage of electronic labor contracts.

According to a report done in 2021, 15% of corporations have included electronic labor contracts as a part of their onboarding processes, taking up 36% of those with pre-existing online onboarding systems, a 140% increase from 2020. On a city level, Beijing announced that Beijing would be pushing forth a single unified platform for the management of electronic labor contracts for all companies in Beijing, joining other areas such as Qingdao, Zibo, Shenyang, Kunming, Guangzhou, Cangzhou, Guilin and Nanning. For companies operating in more than one part of China, the inclusion of unified platforms for electronic labor contracts on a per-city basis (what we are seeing so far) would surely mean more complications.

It was suggested that the contract itself should be defined by five major factors: clarity, preservability, whether it is distinguishable, and whether it is “true”. The last point indicates a need for non-falsification protections placed on digital documents, such as electronic signatures, security of access, and a whole slew of other factors that governance and employers will have to figure out.

This development further implies the likelihood of more regulations over the execution and the management of other electronic contracts, not just labor contracts.. The weaknesses of paper contracts have long since been a source of issues for many companies, such as its vulnerability to damage, high costs for cross-borders signing, and other factors. The increased implementation as well as regulation of electronic contracts are a relief to those bothered by the troubles of paper contracts.

In addition, remarkably, as a known testing ground for many new policies, laws have been experimentally introduced in Shenzhen for disputes over electronic labor contracts. Results from this test would likely determine the general direction the newly developed electronic labor contract laws the country would evolve towards.

So what does it all mean? It is inevitable that documents become digitalised, given the rapid evolution of modern technology, and covid-19 simply accelerated what is bound to come. For employers with employees located in China especially, these recent developments are a reminder to adjust company policies in order to adapt to said developments. For help with adjustments in lieu of changes in laws, do utilise our compliance advisory services for full compliance and a peace of mind.

Articles referenced: 

https://finance.sina.com.cn/tech/2021-06-22/doc-ikqciyzk1111567.shtml

http://www.xinhuanet.com/fortune/2020-05/18/c_1125997826.htm

On the Horizon: Changes in Hong Kong’s Employment Laws

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Covid-19 may have caused countries all over the world to reevaluate certain aspects of their labour policies, as well as the transition into coverage and protection in this pandemic. However, this does not necessarily deter countries from making changes to their employment laws regardless of the covid-19 situation, and analysing them would help one understand the general trend and direction a country is heading towards. In this case, Hong Kong’s recent proposed changes to their labor laws is definitely noteworthy.

In effect: Extension of Maternity Leave

In an effort to support women and to add more incentives to have children, with effect from December 2020, paid maternity leave has been extended from 10 to 14 weeks, with the additional 4 weeks reimbursed from the government. Thus, employers should update their maternity leave policies accordingly.

In other related changes, further protection for breastfeeding women has been passed in the March 2021 Employment (Amendment) bill.

Proposed: Increase in Number of Statutory Holidays

Hong Kong is unique in its number of holidays and its differences — did you know that Hong Kong has separate statutory and public, or also known as, general holidays? Employees are entitled to paid day leaves on statutory holidays, while general holidays outnumber statutory holidays by 5 days, with overlaps. Which is to say, 12 out of 17 general holidays are statutory holidays, while employees are not entitled to paid day-offs for the remaining 5.

In March 2021, the Hong Kong government had gazetted the Employment (Amendment) Bill 2021 to increase the number of statutory days to match the number of general holidays, by increments of one day every two years, until the year of 2030, when the change would be completed.

In the event that this change is executed, employers will have to be aware that their employees are now entitled to more paid leaves than before, and plan the company’s work schedules accordingly. The workforce would have been given time to adjust to these changes throughout the 8 years, and so the changes shouldn’t take anyone too much by surprise.

Proposed: Strengthening of Data Protection Laws

Personal data has become an increasingly valuable asset in the age of modern technology, while also easily abused for nefarious purposes. Employers should pay special attention to the proposal to strengthen data protection laws, as the handling of employee data would most certainly be affected. To stay fully compliant and save costs on hefty legal fees resulting from mishandling of personal data, it is important to always keep an eye on such changes.

Overall

Once a British colony, and now part of China, Hong Kong’s laws have been observed to be shifting to resemble more of China’s. These changes however are progressive changes, putting increased importance on the welfare of the workforce, as seen for the added protection of (pregnant, and breastfeeding) women, tightened security for personal data, and the increase in paid leaves in the form of additional statutory holidays. Perhaps welfare would continue to be in the spotlight of labor laws, with the increased importance on mental health taking place in developed countries too. Adding more welfare for employees would surely be a popular choice among employees, while keeping in line with the general direction these recent changes seem to be set in. For advice on HR policies as well as changes one should make in regards to employment laws, do keep our compliance advisory services in mind.

Articles referenced:

https://www.labour.gov.hk/eng/news/EAO2020.htm

https://www.info.gov.hk/gia/general/202103/05/P2021030300341.htm

Singapore’s Tech Crunch

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Singapore is one of the world’s best seaports, a business hub in the region. However, Singapore has also set her eyes on transforming into one of the world’s top technology hubs. With tech giants such as Bytedance, Zoom, Grab expanding in the region, the tech recruitment scene should absolutely be bustling to the brim with young, bright talents…that is, until one realises that Singapore is currently facing a tech crunch.

What happened?

Singapore has taken measures to become a technology hub, such as various “Smart Nation” initiatives that aim to integrate advanced technology into daily living. Singapore’s world class quality infrastructure and top tier security has also attracted many major companies to the region, drawing flocks of talented people too. However, due to employment laws that aim to safeguard the livelihoods of locals, which restricts the number of foreign talents that could be hired per company, along with the declining local population, many tech companies find themselves lacking in people to hire for their respective technology related job roles. Despite competitiveness for engineering and computer sciences in local universities increasing, many roles are still left unfilled, and recruiters reported having to search for months before they could find someone to fill the roles.

On the other side of the issue, job seekers have reported seeing stringent low pay for entry-level positions with high requisites, and certain sectors have been reported to be overwhelmingly filled with a skewed ratio of foreigners to local citizens. However, even that is changing as covid-19 has impeded global travel, including the commuting of foreign talents to Singapore, and so companies are in need of more local employees than ever. Hence, it is suggested that companies’ recruitment efforts should reflect the strength of their need for tech talents, and offer attractive salaries and benefits, in order to attract local talents. For exclusive delves into the hidden gems of the local tech scene, companies can consider utilising our recruitment solutions, where we specialise in hiring tech talents.

Hong Kong’s road to recovery: Slowly, but surely

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It has been a long, drawn-out year with the fight against the global pandemic, and as the world shifts its gears to adapt to the new normal, there are finally more optimistic signs observed. Hong Kong, where the unemployment rate in 2020 suffered due to both political protests and the impacts of the pandemic, is finally on a gradual track to recovery.

On 20 July 2021, Hong Kong’s Census and Statistics Department revealed that the unemployment rate has dropped sharply to 5.5% for the 3 month period ending in June. Since the beginning of the pandemic in 2020, this is the lowest the unemployment rate has been. A closer look at the labour market across sectors has also confirmed that unemployment dipped across almost all the major business areas. This is even inclusive of sectors that were severely impacted by the impacts of the pandemic, such as the retail sector, in which the unemployment rate declined by 1.4 percentage points. 

Though figures still remain below pre-Covid rate, joblessness in many business services sectors such as real estate, insurance, and even retail, accommodation and restaurant sectors have dropped in tandem with the improvement of the economy. Data shows that In industries like finance, the number of people acquiring jobs has even grown.  

Undoubtedly, Hong Kong’s local economy is gaining momentum and it is on track to a gradual recovery. Given Hong Kong’s vaccine bubble scheme and the easing restrictions, the local epidemic situation is stabilising and businesses are slowly picking up and starting to hire again. It is still expected for the economic growth to continue experiencing volatility, but as of now, it is still a positive checkpoint for Hong Kong. 

If you are looking to expand your business services to Hong Kong, click here to be redirected to our PEO solutions service page. Connect with our consultants to get a deeper view of Hong Kong’s market outlook today.

This article is written in reference from:

Cannix Yau. (2021, July 20). Hong Kong unemployment rate drops to 5.5 per cent as city brings Covid-19 situation under control. Retrieved July 22, 2021, from South China Morning Post website: https://www.scmp.com/news/hong-kong/hong-kong-economy/article/3141811/hong-kong-economy-gathers-steam-unemployment-drops

Malaysia’s MCO: a necessary price to pay?

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In the global fight against the COVID-19 pandemic, Malaysia is one of the countries to face a brutal struggle. Fast forward from the start of the pandemic up until today, Malaysia is currently at their 3rd Movement Control Order (MCO), which is a nationwide cordon sanitaire measure to flatten the curve from the third wave of the virus in their homeland. In essence, all economic sectors are allowed to operate, but cross-district and interstate travel, and social/sports activities are strictly prohibited. 

Today, Malaysia’s unemployment rate stands at 4.8%, with the number of unemployed people jumping over 63% in 5 quarters. It is a crisis in itself, with the vicious cycle of businesses struggling to survive and the bleak job prospects in the market worsening the situation. In a study from official data, skill-related underemployment has reached an all-time high at 38%, highlighting the rising desperation of people having to turn to jobs beneath their skillset.

The pandemic has greatly depressed the employment outlook, with an increasing number of graduates unable to secure jobs and uncertainty continues to loom. As of now, even wage-boosting interventions have failed at compelling the labour market to generate higher productivity jobs. With survival at the forefront of businesses’ concerns, a lot more has to be done to extend support to these struggling businesses. As of 28 June 2021, the Malaysian Government has rolled out the Pemulih Stimulus Package, which is a 150 billion-ringgit fiscal spending initiative in the form of unemployment assistance, cash aids and wage subsidies. In this, special grants and support for small and medium-sized enterprises are also included.

Undoubtedly, Malaysia is in a crutch trying to balance the effects of shuttering sectors while shouldering the impact on their economy. However, at all costs, Malaysia is refusing to revert back to MCO 1.0, which is a full COVID-19 lockdown with all sectors shut. Malaysian Prime Minister Muhyiddin Yassin has firmly explained the risks of doing so, with the threat of a collapsing economy at the forefront. Thus, despite the calls for stricter curbs on the MCO, it is a fragile situation that needs careful management.

If you are looking for a job or talent prospects in Malaysia, you’re in the right place. Connect with our consultants to let them help you find a footing amidst the uncertainty in the Malaysian labour market. Click here to be redirected to our services page for more information.

This article is written with reference from:

Falak Medina, Ayman. “Malaysia’s Pemulih Stimulus Package: Supporting Businesses and Individuals.” ASEAN Briefing, 30 June 2021, www.aseanbriefing.com/news/malaysias-pemulih-stimulus-package-supporting-businesses-and-individuals/. Accessed 13 July 2021.

Hirschmann, R. “Malaysia: Skill-Related Underemployment Ratio.” Statista, Statista, 2 June 2021, www.statista.com/statistics/1240959/malaysia-skill-related-underemployment-ratio/. Accessed 13 July 2021.

Lee Hwok Aun. “Barring Failures to Contain Potential COVID-19 Waves, Malaysia’s Economy and Labour Market Look Poised to Recover, Says a Researcher.” CNA, CNA, 18 Apr. 2021, www.channelnewsasia.com/news/commentary/malaysia-economy-recovery-covid-19-mco-jobs-employment-market-14634452. Accessed 13 July 2021.

4 Reasons why your business needs to engage in PEO services

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Professional Employer Organisation, also known as PEO, is a term quickly gaining traction globally. Especially because we are currently living in the climate of a pandemic, this has forced many businesses to think about engaging PEO services to facilitate their expansion in the international markets. 

If you are here, chances are you are deliberating on whether or not to work with a PEO. Here are 4 reasons why it might be time for you and your business to take the leap of faith.

  1. PEO helps you navigate your business

With COVID-19 throwing many business plans off tangent, we know that expanding abroad might be one of the tougher goals to achieve now. Growing a business overseas is inherently difficult and without the right investment of effort, it is easy to fail because research and experience in the particular market is the key to success for overseas expansion.

This is how a PEO can be your biggest asset. A PEO that has experience in the specific market you want to expand to, can help navigate your business and provide accurate advice with regards to legal issues and more. If you are uncertain of the business culture, HR and employment functions in said country, it is encouraged to work with a PEO that can guide your business and ensure that your business is compliant on foreign grounds.

  1. PEO lets you focus on your business strategy

Hiring employees, addressing compensation, benefits and compliance issues are additional functions that can be labour-intensive and easily neglected if the right resources are not invested to look after them. But by working with a PEO, you can free yourself off taking care of these and focus on your strategic business decisions. Essentially, a PEO will act as a support function for your company to address your HR needs. Furthermore, you are leaving your people in the hands of specialised experts who can professionally manage the HR infrastructure. No more ambiguity, no more hassle.

  1. PEO helps you gain a competitive advantage

This thus enhances your business’s competitive position as well, not just because you can now focus on your strategic goals. Since a PEO helps you in recruitment and employment, you will be in good hands in terms of attracting the right talents that fit your company. Not only that, a PEO can help you save time and cost since PEOs already have direct access to an extensive database of qualified candidates. This can once again help you realign and narrow your focus to just making the final hiring decision.

  1. PEO protects your business

The IRS states that an estimated 40% of small businesses pay an average fine of $845 annually due to avoidable payroll and tax mistakes. All these errors and mistakes can add up to a hefty cost. Penalties aside, payroll mistakes easily kill the morale of employees, which can impact the workforce productivity if left poorly managed. In this aspect of compliance, it can be tricky for businesses that want to expand to markets that operate under different policies and regulations. While it is not impossible to navigate through it yourself, a PEO can take away the stress and provide certainty with regards to protecting your business from avoidable mistakes like such.

Ultimately, working with a PEO can bring obvious advantages to your business. If you are currently looking to expand into the Asian market, we are offering PEO services for specific markets in China, Hong Kong and Singapore. Even if you have not made a final decision, feel free to speak with our professional consultants about any enquiries. You can also click here to be redirected to our PEO Services page to learn more about what we offer.

This article is written with reference from:

The European Business Review. (2020, September 28). What does a PEO do and how can it benefit your company? Retrieved June 21, 2021, from The European Business Review website: https://www.europeanbusinessreview.com/what-does-a-peo-do-and-how-can-it-benefit-your-company/

Asia: Salary growths to improve in 2021

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In 2020, many employees suffered a reduction in salary growth due to adverse financial impacts on business from socio-political tensions and the pandemic. The reduction in growth dropped from 4% in 2019 to 2.1% in 2020. That brings to an estimate that 2 in 5 Hong Kong employees were not getting any wage increase at all. 

However, experts have forecasted that there will be an increase in salary growth to an average of 3% in 2021 as businesses remain hopeful of a gradual economic recovery. In the APAC region, lower salary growth rates are observed across all locations as well, but their average forecasted increase in 2021 is relatively higher at 4.3% as compared to Hong Kong.

Real salaries in Hong Kong however – salary after the consideration of inflation – will still be estimated to be low, at a forecasted figure of 0.6% this year. In comparison with Singapore’s forecasted figure of 2.7%, this is an observable gap, which may reflect Hong Kong’s pace in keeping up with remaining competitive economically. 

These forecasts take into account that lesser companies are now implementing salary freezes. A study by ECA International revealed that the average real salary increase across the APAC region is forecasted at 1.7%, which is much higher than the global average of 0.5%. Since the inflation rate in Asia is not too far off the global average, this forecasted increase is attributed to quick adaptation to the pandemic, leading to sustained productivity and hence, possible salary increases.

China is another country to show positive signs of recovery, and China employees can expect to see a 5% salary increase, up from 3.8% in 2020. Real salary growth is forecasted to be an average of 2.3%, slightly behind Singapore. However, China has shown remarkable improvements and resilience in terms of managing the impact of COVID19.

This article is written with reference from:

ECA International. (2020, November 18). Workers in Hong Kong set to see recovery in salary increases in 2021. Retrieved June 21, 2021, from Eca-international.com website: https://www.eca-international.com/news/november-2020/workers-in-hong-kong-set-to-see-recovery-in-salary

Hong Kong: The frozen minimum wage

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On 2 February 2021, Hong Kong Secretary for Labour and Welfare, Law Chi-kwong, announced that the minimum wage will be frozen at HK$37.50 per hour from May 2021 up till 2023. Since the Minimum Wage Ordinance was enacted in 2011, this is the first time that the minimum wage is frozen. 

This freeze is in response to Hong Kong’s current economic recession and high unemployment rates. On top of that, the Hong Kong government believes that by freezing the minimum wage, it can help to minimise the loss of low paying jobs which threatens to further depress the unemployment rate. 

However, concerns have been raised by the HKFTU’s Rights and Benefits Committee with low-income workers in mind. In fact, the members of the committee have been lobbying for subsidies for the low-income workers to mitigate the impact of the frozen minimum wage on their quality of life. Essentially, they are fighting for the Government to offer subsidies so as to make up for the grassroots’ loss of purchasing power. 

This was however rejected as the chairwoman of the Minimum Wage Commission argued that the previous 8.7% wage increase from 2019 has outpaced inflation thus far and hence, this freeze in minimum wage will not adversely affect the purchasing power of the grassroots. Moreover, Secretary Law said that there are other government welfare policies in place such as the Comprehensive Social Security Assistance which can help this group of people. 

Ultimately, this move in freezing the minimum wage is to strike a balance between forestalling excessively low wages as well as reducing the cuts in low paying jobs. 
If you want to know more HR insights about expanding your business in Hong Kong, feel free to connect with us. Or click here to be redirected to more information about employment regulations in Hong Kong. 

This article is written with reference from:

Chau, C. (2021, May 25). Hong Kong freezes minimum wage amid pandemic woes | HRM Asia. Retrieved June 21, 2021, from HRM Asia website: https://hrmasia.com/hong-kong-freezes-minimum-wage-amid-pandemic-woes/

Cheng, S. (2021, February 4). Freezing Hong Kong minimum wage at HK$37.5 an hour is an “insult” to cleaners at Covid-19 frontlines, labour group says | Hong Kong Free Press HKFP. Retrieved June 21, 2021, from Hong Kong Free Press HKFP website: https://hongkongfp.com/2021/02/04/freezing-hong-kong-minimum-wage-at-hk37-5-an-hour-is-an-insult-to-cleaners-covid-19-frontlines-labour-group-says/

Rthk News. (2021, February 2). Govt freezes minimum wage for the first time – RTHK. Retrieved June 21, 2021, from Rthk.hk website: https://news.rthk.hk/rthk/en/component/k2/1573669-20210202.htm