Published April 18, 2008

Many in S'pore expect pain if recession comes

Banking sector most downbeat, IT appears resilient: Hudson report


(SINGAPORE) If there is a recession, business here is more likely to be hit than that elsewhere in Asia. And workers here may feel the pain, too.

Not everyone in Singapore is anticipating a downturn. Only about a quarter (26 per cent) of 733 executives in key business sectors polled recently see a recession coming in the next six months, with those in the healthcare and life sciences business the most downbeat.

But overall, hiring expectations for the second quarter have dipped, with 49 per cent of the executives polled intending to increase headcount, down from 51 per cent in Q1 and 56 per cent a year ago.

Among executives expecting a recession, almost four out of five (79 per cent) expect business to be affected. This is more than in any other Asian country covered in the latest poll by Hudson, a leading recruiting executive recruitment firm in the region.

Analysts are not surprised at this, pointing to the fact that the Singapore economy is more open - and thus more vulnerable than others to a global recession.

In the banking and financial services sector, more than 9 out of 10 of the pessimists share the belief that business would be hit because, Hudson says, banks are likely to be the first to feel the pain of a downturn in the global financial industry.

Executives in the information-technology and telecommunications sector are the most resilient, with just under two-thirds (64 per cent) indicating they think a recession would hit business - the lowest figure among all sectors.

'Companies expect that major IT projects in the financial and public sectors will provide continuing growth opportunities,' Hudson says in its report on hiring and human resource trends.

Across all sectors, 58 per cent of the executives polled here said a recession would affect their hiring plans - a figure higher than for in any other Asian country surveyed by Hudson.

'There is a high degree of consistency between the sectors,' Hudson says. 'The banking and financial services sector has the highest number of respondents saying their hiring plans would be affected, at 65 per cent, and the IT&T sector the lowest, at 53 per cent.'

A freeze in headcount is most likely in the event of a recession, with 9 out of 10 of the executives polled saying they would take this measure. Only a low 19 per cent of those polled would reach for the axe to chop workers.

A third of the executives indicated they would resort to a pay freeze if there is a downturn, making this the second most popular measure. Companies in the media, public relations advertising (50 per cent) and IT&T (44 per cent) are the most likely to make this move.

'These sectors are also the least likely to cut staff,' Hudson notes. 'Both industries are still busy and would rather freeze salaries than cut staff, to ensure they have adequate resources for ongoing projects.'

Hudson's latest poll shows hiring expectations have fallen in every sector except the media, public relations and advertisement.

'Among the media/ PR/advertising firms, hiring expectations have grown over the past year,' Hudson says. 'In Q2 2007, 48 per cent of respondents expected to expand recruitment, compared with 52 per cent this quarter. Much of this demand is driven by the growth of online advertising and digital media.'

Which is perhaps why the media/PR/advertising sector is the least pessimistic about a recession, with only 11 per cent of its executives polled predicting a recession in the next six months.