With the COVID-19 pandemic disrupting global economic activities and unemployment rates increasing rapidly, 2020 might be one of the worst years for fresh graduates seeking a job.
Businesses have been sent reeling, with Singapore's economy suffering a deeper recession than estimated in the second quarter of 2020. But she's not alone: developed economies such as UK, France and Canada are all facing recessions due to the pandemic as well.
In fact, the World Bank predicts that the pandemic will plunge the global economy into its worst recession since World War II.
With the global economy in disarray, how can fresh graduates and jobseekers prepare themselves as they enter the workforce? Assistant Professor Sanjana Goswami from the Lee Kuan Yew School of Public Policy (LKYSPP) sheds some light on the global labour market during a recession.
Uncertainty in the current global economy
The labour market in Singapore is witnessing a decline, especially with the aviation, hospitality, leisure and retail sectors being hardest hit.
"The outlook for the global labour market is extremely uncertain as it depends on how long the pandemic will continue to disrupt economic activities, and what policies are undertaken to promote recovery," said Professor Goswami. While the situation will improve, she believes that it is unlikely to happen anytime soon as the pandemic shows no signs of subsiding.
A report by the International Labour Organisation (ILO) reveals that the economy is unlikely to return to pre-pandemic levels by the end of 2020, even under the most optimistic scenario — which refers to a fast recovery of the economy with no second wave of the pandemic. Yet we are far from such an idealistic scenario, with the pandemic still rampant in countries such as the US and India.
Even though the Singapore government has introduced several initiatives such as the SGUnited Jobs and Skills Package to ease the job crunch by encouraging employment, Prof Goswami said that anecdotal evidence suggests employment rates remain lower than the rate of layoffs.
Shrinking economic activity and widening inequality
Unlike past recessions, global mobility has been severely impacted in this crisis. It is true that developed economies are shrinking. However, as the epicentre of the pandemic shifts to the developing world, a report by the UN revealed that emerging economies are the ones who have been hit the hardest. As economic activity shrinks, inequality and poverty are rising, especially in developing and emerging economies.
The nature of one's employment also affects prospects of job security. White-collar workers who have the option of working from home usually hold higher-paying jobs, leaving blue-collar workers, such as those in occupations with a high proportion of routine tasks, in more vulnerable positions, said Professor Goswami.
The proportion of these jobs is also higher in developing and emerging economies, leaving a larger portion of the workforce vulnerable to the pandemic, in contrast to developed economies with a higher proportion of white-collar jobs. "According to surveys and polls in various countries, lower-income individuals have reported job losses and wage cuts," she said.
In addition, income inequality is likely to worsen since those with the least access to higher education will be the least employable when the global economy recovers.
More needs to be done by governments worldwide to provide the necessary support for the vulnerable: to protect their livelihoods, minimise their risks to the pandemic, and combat the worsening income and class inequality in many countries.
However, the increase in protectionist policies put in place by many governments could have long-term consequences on the global market, said Mr See Haojun, a Master in Public Policy (Class of 2021) candidate at LKYSPP.
Challenges for fresh graduates
For fresh graduates, a shrinking global labour market is one of the worst times to be searching for a job. According to Professor Goswami, studies show that employers tend to raise education requirements during a weak labour market. This can lead to a decrease in the earnings and asset-building of those that graduated during a recession.
This not only affects their current job prospects, but it can have a long-lasting effect on their future careers. "A paper by Jesse Rothstein finds that in the United States, cohorts that face high unemployment when they enter the labour market during a recession have statistically and substantively lower employment rates throughout their careers," she said.
Furthermore, technological advancements are likely to aggravate the situation of reduced hiring and unemployment. As more jobs are replaced by technology over time, Professor Goswami expects greater job polarisation to occur. This means that there might be a reduction of "middle-class jobs requiring moderate levels of skills – for example, in manufacturing and clerical occupations".
Foreign jobseekers may face more difficulties in finding jobs now as the Singapore government urges firms to prioritise locals over foreigners. This has led to worries among international students who are seeking a job in Singapore.
"I'm afraid Singapore might be losing foreign talents that can [bring] innovation and diversity [to] the economy," said Jenny, a Master in Public Administration (Class of 2020) graduate, LKYSPP. "I hope [that foreigners] can still be connected to the Singapore network, [add] values to [the] regional economy… [and] bridge Singapore to our local communities."
Indeed, the qualifying criteria for the Employment Pass scheme is tightening. Amidst growing fears of job competition with foreigners, the government has adjusted their foreign work pass policies and pledged to "always be on the side of Singaporeans".
However, Prime Minister Lee Hsien Loong highlighted that Singapore needs to remain open and welcoming to foreign talent even in the current recession. Global talents are still necessary for Singaporeans to pick up skills from international teams, and for our local companies to develop themselves.
There is also concern that this economic downturn gets dragged out over a longer period of time as a result of lower aggregate demand.
"There is a real risk that consumer behaviours don't recover, which can lead to a downward spiral. Lower demand means less need for jobs, translating into less wages for people to consume, which ultimately leads us back to the original problem once again," said Bernard, a Master in Public Policy (Class of 2021) candidate.
With that, it could mean that labour markets could take a while to recover.
Supporting students in prospective careers
If you are a fresh graduate, it might be heartening to know that you are not alone in this struggle. Government schemes and local universities have been supporting their students through this crisis with various policies and initiatives.
For example, the SGUnited Traineeship programmes seek to help fresh graduates gain industry-related skills and build their networks. New jobs and apprenticeships are offered across different industries, ranging from healthcare to deep tech sectors. At NUS, the Resilience and Growth Initiative aims to help students find traineeships and internships to tide over this crisis.
To increase one's employability, Professor Goswami advises jobseekers to "[acquire] as much knowledge and skill as they can through internships, apprenticeships, [and] online courses". Her explanation is simple: when hiring options are limited, those with more knowledge and experience are preferred.
Some students remain hopeful about the future; while they acknowledge that times might be tough now, they believe that the situation will look up a few years later as the crisis abates.
For Haojun, getting a job is not his top priority. As he believes that "there are enough jobs out there in Singapore", he is willing to take on "a lower-paying job for the next few years" to temporarily tide him across this crisis.
"I am filled with trepidation as I am not sure what the future holds. But at the same time, I am confident that the skills that I have picked up in my earlier career as a teacher, [and my increased] understanding of policymaking and research skills [from] my two years at LKYSPP, will put me in a good stead when I graduate and return to the work force," he added.
(Photo: Yinan Chen)