Newsletter #99: What Happens After Retrenchment?
How have you been?
In the recent news headline, there are a few things that caught my attention, in particular the rise of retrenchment in Singapore during Q2 2026. (You can read more about it here, by CNA) I do believe that the retrenchment numbers reported is likely lower than the actual, given that it's common for companies to label it as anything else other than retrenchment. It can be called PIP (performance improvement program), workforce optimisation, and etc. (On this part, I am fairly certain given that I used to be a human resource professional)
The good thing is that Singapore government has been pro-active and doing a lot for the people, in my opinion. If you look into what Skills and Workforce Development Agency (SWDA), E2i, various community initiatives and the policies of MOM, you might have realise that there are a lot of effort being put into helping Singaporeans. Although some might vehemently disagree, they can always look into other countries and check out what's happening in other markets.
Obviously, there is no one in the world who can stop global trends from impacting Singapore. Whether it's the movement of jobs to lower cost countries (off-shoring), the reduction of jobs from AI and robotics (productivity improvement), industries or jobs being made obsolete.
For many who has experienced retrenchment or retrenched workers before, that might have been a challenging period in your life. For most SME owners to retrench workers, it's typically for the survival of the company rather than profit maximisation, given the lean headcount of the organization. Whereas for workers who have experienced retrenchment before, it can be a traumatic event.
Depending on which phase of life, the role and the industry that they are in, it can either have a long or short-term impact in their career. I suspect that those who are in their late 40s to early 60s will face the biggest challenge in getting a new job. There are many factors that contribute to this effect.
1) Ageism - Many of the management folks especially those who are not so young, typically prefer to hire younger staff. (An irony here) This is not peculiar in Singapore. It's happening across many countries: China, South Korea, Hong Kong, Taiwan... You don't have to take my word for it, you can always check with your peers who are based overseas.
2) Obsolesce - The pace of development can easily render any industry obsolete. The disruption of an industry can have a major impact on the business model and the survivability of the organization. Older professionals who develop their expertise for a particular market segment or role, may find themselves out of depth in a rapid changing sector that have need for new skillsets.
3) Change in GTM (Go To Market) motion - In the past few decades, the preferred option for many MNCs is to hire a regional role in Singapore (Hub and Spoke strategy), to oversee the development of Southeast Asia or APAC market in many industries. There is a shift in such strategy as Singapore is becoming an increasingly high cost center and there are various alternatives in Asia Pacific market. Think Kuala Lumpur, Bangkok, Hong Kong, Beijing, Tokyo and etc... Moreover Singapore is not a viable market for many industries, given the size of our economy and population.
4) Hire for Fit Rather Than For Skills - While it might seem surprising to some people, it's common among many MNCs and SMEs to hire certain people simply because they fit the mould or got hired for specific reasons, rather than being an effective contributor. This group of folks are typically adept in building relationships, rather than contributing productively. Hence when they got retrenched, they start to realise they do not have the skillsets or track record to compete effectively for a job.
So you might be thinking, what does this got to do with M&A or buying and selling of businesses? Which is a perfectly valid question. I will share with you more below. Meanwhile check out the infographic below on the unemployment rate globally.
If one is impacted by retrenchment in their 40s and 50s, there are a few viable options they can consider. Each has their pros and cons.
Employment Route - Continue looking for a job. For any decent role, they can easily compete with 200 to 500 applicants. Job hunting can be stressful and it can take anywhere between 6 months to 2 years, before they find something suitable. There is a real possibility that one may have to take a significant pay-cut due to a change of role or industry, which might be a practical route.
Consultant / Fractional Route - Start looking for customers who are willing to pay you for your expertise and time. Rather than serving one formal employer, now you have to constantly network and look for a handful of part-time employers. There are occasions where this group of folks are paid better than they were as an employee. There are a few pre-requisites though. They need to be competent in their domain, know how to find customers and serve them well. This is akin to a self-employed option.
Start a business - This is a tough route and statistically speaking, at least 90% of these folks would close down in the first five years. The amount of risk involved, time and effort put into this endeavour would be of a different scale. Not recommended for the faint-hearted and those who expects a quick return.
Entrepreneurship Through Acquisition (ETA) - Buy a business that has been around for sometime and is already profitable. Normally the owners are either looking to retire or move on to do other things. The pre-requisite for this option is that it requires you to have money to acquire a small business.Typically if you are looking to acquire a business that is worth SGD $1 million, you need to have $650k in cash. There are a few risks associated to this option, which includes inability to identify and acquire the right business, lack of operator skill set and wastage of time in the sourcing of deals. (You can learn more about the pros and cons of buying a business in this article.)
Hope you find this newsletter useful. If you happen to know of any SME owners who are looking to retire or sell their business, kindly refer them to me. It can be in Singapore, Malaysia or any part of Southeast Asia. Thank you. :)
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