Asia Perspective: Braving the Economic Woes in Singapore


Roman Stoic philosopher and statesman Seneca (Lucius Annaeus Seneca) once said, “Fire is the test of gold; adversity, of strong men.”

In today’s global economic meltdown, it would appear even the most successful of nations and corporations are facing either tremendous challenges or, in the case of some corporations, complete collapses altogether. If this is Seneca’s vision of the fire that refines gold, then surely such adversity must make some of the toughest survivors out of nations and corporations.

The Singapore government has traditionally been very prudent. In drastic and challenging times such as this, it rises to lead and reduces the impact of the economic crisis not only to commercial entities, but also to the everyday Singaporean.

On January 22, 2009, Minister for Finance Mr. Tharman Shanmugaratnam delivered the 2009 budget. The honorable minister announced a Resilience Package of S$20.5 billion (approximately US$13 billion), which is geared toward saving jobs for Singaporeans, stimulating bank lending, enhancing business cash flow and competitiveness, supporting families, and building a home for the future. According to BBC UK, this budget would be valued at 6 percent of the island nation’s GDP. Some of the measures include the Jobs Credit Scheme to help employers defray employee costs and thereby retain as many resident employees as possible, rather than simply laying off local employees first. Already, the fears of people getting laid off is very real. According to the same article by BBC UK, Credit Suisse predicted that 300,000 more jobs may be cut by the end of 2010. The stimulus package also enhances local bank lending schemes, where the Singapore government will have a Special Risk-Sharing Initiative with a bridging loan program and trade financing, so that banks are more willing to lend to local enterprises. The government also announced a 1 percent corporate tax cut to 17 percent.

So against a backdrop of declining demand for products and services worldwide, shrinking availability of credit, and a gloomy atmosphere to top it off, how would ethical corporations cope?

It might be important to remember that while the times were good and contracts were continuously won by able employees and delivered successfully to paying customers by internal experts and support teams, these are the same good employees who deserve to ride out the economic storm with your corporation together. After all, many corporations have gone through tremendous efforts to recruit the best talents. So it would make perfect sense not to simply lay off good people just because the numbers are down due to global fallouts. Once the economic storm is over, companies that have laid off employees would need to hire all over again. Put yourself in the shoes of prospective candidates. Would a candidate have rational fears that a trigger-happy organization that hires and fires rapidly, might do the same to this candidate? Hiring people is the same as winning customers. Retaining an existing customer is more profitable and easier than trying to win new ones.

But the reality is still present — sales are down, orders are down, and customers are fewer and harder to find. Beyond having the goodwill to retain existing employees, there must be a collaborative way with the employees to see how best to retain them under such grueling circumstances. For example, some organizations might consider pay cuts for all, peripheral cost-cutting measures (such as the reduction of staff perks and recreation), and perhaps even shorter work hours and the reduction of shifts, with a corresponding reduction in pay. Such extraordinary measures, while not making anyone happy, will at least cushion the employees from straight layoffs. Managers may even be flexible to allow some employees to take longer leave altogether, and reduce staff costs and operating costs appropriately. Such employees may take the time to spend more time with family, or perhaps even take up new enrichment or credit courses for future capability development.

Throughout its short history, Singapore has demonstrated a resilience and strength that competes well. There is no doubt that Seneca’s vision of the grueling fire will refine gold out of many Singaporeans, and many will emerge stronger, faster, and more capable.

By Seamus Phan

Based in Singapore, Seamus Phan is
one of Asia’s leading thinkers and practitioners
in business leadership, Internet security, and marketing.