[Newsphopick=Kingsley Lim] One of the problems that we had to face in recent times is the contraction of the global economy. This black swan event, triggered by the coronavirus has affected the lives of many. According to recent data from US sources, the number of bankruptcies are soaring and retail is facing one of the toughest periods currently, worse than what was experienced in the Great Financial Crisis in 2009.
Factory and store closures have been a norm in many parts of the world. This has preceded a fall in consumer spending which is a driver of economic growth in Singapore. The Trade and Industry Minister Chan Chun Sing in Singapore had some wise but sombre words for its citizens.
“We are not returning to a pre-COVID-19 world … We must chart a new direction now,” said Minister Chan Chun Sing on August 11, while adding that the second quarter is Singapore’s “worst quarterly performance on record”.
“To put things in context, this is our worst quarterly performance on record. The forecast for 2020 essentially means the growth generated over the past two to three years will be negated,” said Chan Chun Sing.
He added that “The numbers reflect the impact of COVID-19, as well as deeper forces reshaping the global economy and our position in the global value chains.”
These new economic realities are some of the problems that all of us have to face, according to Chan Chun Sing. Hence, it is essential that we adapt to survive and find a new way of doing things. While some of us may be hoping for a quick recovery, things can be more complicated than it actually is. The “painful truth” according to Minister Chan Chun Sing is that the world is not likely to return to a pre-coronavirus norm.
At present, the tension between global powers, China and US, is palpably high. The trade war may not end anytime soon, and hence, trade between the countries may be badly affected on top of an ongoing virus whose containment is uncertain.
“We can expect recurring waves of infection and disruption,” said Chan, while adding that the “World has changed irrevocably”. According to Chan, he hoped that the geopolitics between the two world’s powers will not morph into an open conflict and destabilise the world.
New paths to chart
Global companies have been badly hit by the coronavirus. With a simultaneous fall in demand and supply, companies are now beginning to recognise that supply chains must change to suit the times. While it is typically the case that companies rely on China for its manufacturing and sourcing needs, companies must now diversify away from China.
An example of that would be opening up a few factories in Asia as opposed to having a few factories concentrated in a particular region in China. When the virus struck in Wuhan, China, supply chains were immediately decapitated from its source – China.
Vietnam, which is in close proximity to China, and has a vast coastal economy, is the unlikely beneficiary of the coronavirus. Companies have to adopt a “China plus one” strategy and relocate some of its factories to serve its customers. Hence, the focus is one of “diversification”.
Chan said “New investments will come our way … some existing ones may also diversify away from Singapore ... It is a fluid landscape and we must do everything we can to defend our capabilities and capacities.”
Since the landscape is changing, it is inevitable that the nature of jobs will also change. Since the coronavirus pandemic struck, we have had to reinvent “work”. Now, work for many consists of sitting at a desk at home, while collaborating with colleagues over a videoconferencing tool such as Zoom.
Is the new normal? Some say that it is. Facebook, one of the largest companies in the world has led that charge by allowing its employees to work from home till July 2021. If Facebook, Twitter and other technology giants are doing it, it is likely that this will continue in the near future as workers around the world demand safe conditions in the workplace.
“With remote work, more global job opportunities for our workers will come. But it also means that other workers, in other countries, can do our jobs from their homes,” said Chan.
He added “You might have noticed that some jobs in the regional headquarters here are being advertised as ‘can work in Singapore’ or ‘can work remotely’. This will affect many PMET jobs, which can be done virtually or through automation and AI,”
“We do not have all the answers yet and the ground realities are fast evolving, often without precedence, but we know that staying still is not an option,” said Mr Chan, adding that the Government will work together with the people to “help them understand the need for changes and to implement them smoothly”.