Singapore to face more job losses, wage cuts, MAS report

Victor Kang29 Apr 2020

While the government has rolled out a slew of aid to help workers and employers, MAS still expects retrenchment and unemployment to increase.

With the local economy grappling with the fallout from the Covid-19 pandemic, the Monetary Authority of Singapore (MAS) expects to see more job losses and wage cuts as slack in the labour market increase.

Singapore’s labour market conditions had already softened even before the Covid-19 outbreak, reported CNA citing MAS.

However, the global and local measures aimed at containing the spread of the virus led to the stoppage of various economic activities, which resulted in a sharp decline in demand for workers.

While the government has rolled out a slew of aid to help workers and employers, which include a 75% wage subsidy for companies in all sectors, MAS still expects retrenchment and unemployment to increase.

“Notwithstanding the large financial buffer provided by the government, as well as labour market adjustments on the intensive front, the large, abrupt shock to the Singapore economy is still likely to cause retrenchments and unemployment to rise,” it said in its bi-annual Macroeconomic Review.

Companies that were already in weak financial position prior to the Covid-19 outbreak “are more likely to retrench”, added MAS.

Related story: Covid-19 Home Loan Deferment: What Is It, What’s the Catch and How Do I Apply for It?

On industries where employment will be most severely affected, MAS pointed to industries that witnessed a “sudden stop” due to stricter measures rolled out by the government. These include travel-related industries like accommodation and air transport as well as domestic consumer-facing services such as retail trade, food services, land transport and other personal services.

The report noted that workers in retail trade, recreation and food and beverage (F&B) services are “most vulnerable” to lay-offs.

This comes as most of these companies are small and may face significant credit constraints, limiting their ability to hold on to their employees, it said.

Meanwhile, MAS expects wages, instead of employment, to “bear the brunt” of the negative shock in the near term.

“As revenues shrink, firms are likely to reduce labour costs via a combination of reductions to wages and headcount,” it wrote in its 132-page report.

“Notwithstanding the government’s support measures, some firms affected by the fallout from COVID-19 may still have to undertake labour cost adjustment measures such as putting workers on shorter work weeks or no-pay leave…This could occur as wage subsidies and other support may still be insufficient to cover revenue losses for some firms.”

Some companies may also ask its employees to take pay cuts. A drop in overall remuneration within some sectors could also be seen in bonus reductions.

MAS expects nominal wage declines to happen “swiftly and sharply” within the transportation and storage as well as financial services industries, given that remuneration in these industries is highly dependent to changes in business cycle conditions.

To illustrate, MAS cited Singapore Airlines, which announced significant pay cuts and compulsory no-pay leave that affected about 10,000 employees, after it slashed 96% of its scheduled capacity until the end of April.

The central bank also expects significant monthly wage declines in the accommodation and food services industry, on the back of reduced working hours.

Considering the high variable components in their wages, the community, social and personal (CSP) services as well as the financial services industries will “significantly” contribute to this year’s overall wage declines, said MAS.

But elevated demand for healthcare workers and higher bonuses extended by the government to the healthcare sector would provide some support to wages within the CSP sector, added MAS.


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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email


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