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By Lien Hoang
Dec. 14— Dismiss workers without alerting the government and prepare to pay a fine, Singapore is telling companies as it aims to keep a business-friendly image while supporting an increasingly insecure workforce.
Rising unemployment and labor-driven immigration have unsettled citizens and driven authorities to act. Effective Jan. 1, 2017, employers that lay off five or more workers in a six-month period without notifying the Ministry of Manpower could face penalties of up to $5,000 (U.S. $3,500). Singapore's policy could become a model for countries that want to help workers hurt by globalization without erecting protectionist barriers.
The ministry said in a press release that it will use data on layoffs “to help affected employees find alternative employment and/or identify relevant training to enhance employability.”
Singapore isn't requiring businesses to pay so-called “retrenchment benefits” when they let workers go, but law firm Rajah & Tann predicted the government will “continue to strongly encourage” payments worth two to four weeks' salary per year of employment.
“From a practical perspective, such payments are generally recommended as they are morally right, and go towards showing that the company had considered the needs of its employees prior to conducting a redundancy exercise,” Rajah & Tann said in a client alert.
With low taxes and regulations, the Southeast Asian nation of 5.6 million has a reputation for welcoming companies. But the government, run by a single party for much of Singapore's half-century lifespan, is also eager to keep citizens content. In recent years, this has resulted in the expansion of paternity leave and the requirement that employers consider Singaporeans for job openings.
Now there's more pressure to maintain economic stability in the face of such negative developments as an increase in the unemployment rate from 2.8 percent in 2015 to 3 percent in 2016 and in the number of layoffs from 10,210 in the first three quarters of 2015 to 13,610 in the same period in 2016.
Some jobs are moving from Singapore to lower-cost countries, according to recruitment consultancy Robert Walters. Postings for merchandising and purchasing jobs, for example, dropped 34 percent in the second quarter compared to the same period last year, the firm reported.
“Sectors like manufacturing, residential property and shipping have come under duress as companies undergo restructuring to cut costs,” Robert Walters said in a November report. “However, there has been positive growth in the technology and e-commerce field.”
Rajah & Tann said Singapore's latest lay-off rules are meant to push companies to trim their staff “in a responsible manner.” The rules apply to businesses with at least 10 employees and include temporary workers with full-time contracts of six months or more. Companies have five days to report dismissals, using an official spreadsheet whose entries include employees' residency status and labor union details.
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