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Pay in Singapore financial services could fall “swiftly and sharply” this year, says MAS

The Monetary Authority of Singapore (MAS) has said that declines in nominal pay are likely this year in the finance sector. The warning is contained in MAS’s new Macroeconomic Review, a hefty document published twice a year that outlines the analysis of its Economic Policy Group (EPG).

As the name suggests, the review focuses on the major trends shaping the Singaporean economy, but the latest edition also contains some more specific insights into how Covid-19 is affecting the finance sector – and jobs within it. Here’s what you need to know.

Financial services will face “multiple headwinds in the months ahead”

It’s going to get worse before it gets better. “Growth in financial services is expected to moderate as the Covid-19 outbreak softens prospects in banking, other auxiliary activities, and insurance,” the report says. The “fluid and fast-moving” pandemic has also rendered “highly uncertain” the outlook for the Singapore economy. The 2020 GDP growth forecast range has been downgraded and widened, to −4.0 to −1.0%. This outlook is contingent on the transmission and incidence of the virus, and the pace at which countries recover from its health and economic effects. “These external circumstances will determine the depth and duration of the contraction in the Singapore economy, as well as the strength of its eventual rebound.”

Pay will come under pressure

As we’ve reported, all three Singaporean banks have promised not to cut jobs, as have Asia-focused Standard Chartered and HSBC, alongside global firms such as Citi, Goldman Sachs and Morgan Stanley. And DBS today committed not to reduce salaries. But it is possible that in the near future pay rises in the finance sector could fall under the rate of inflation, leading to pay cuts in real terms.

“EPG forecasting models at the industry level show that nominal wage declines are likely to occur swiftly and sharply” in the financial services industry, where remuneration is “highly responsive to changes in business cycle conditions”, says the MAS report. Financial services is also among the sectors that will “contribute significantly to overall wage declines for 2020”, because of the “high variable components” (e.g bonuses) within employees’ remuneration.

Technology jobs in banking are still in demand

The review highlights the recent surge in usage of digital banking platforms in Singapore during the Covid-19 pandemic. “The current enforcement of social distancing measures and lockdowns globally will hasten the pace at which consumers and businesses transit towards cashless modes of payment”. As we’ve reported, technology teams at banks have been working hard (and recruiting) as they launch and enhance their online products in response to demand. In a March report on the impact of Covid-19, McKinsey says the pandemic has forced Asian banks to “significantly accelerate their shift to digital channels”. 

MAS is encouraging banks to hire local graduates

“MAS is doubling the salary support for financial institutions that hire local fresh graduates or workers from other industries,” says the report. This refers to an increase – from S$1k to S$2k per person per month – in a pay subsidy that MAS offers financial institutions. The programme should “help strengthen job creation in segments of the labour market that are more insulated from pandemic effects, or which are experiencing an increase in manpower needs”.

Corporate bankers are busy

If you’re a corporate banker serving the small and medium-sized enterprises (SME) sector in Singapore, you’ve probably had a busy year so far. “Local banks had reported a sharp rise in loan applications from small and micro enterprises, particularly in the retail trade, food services and hospitality sectors,” says the report. MAS has introduced new facilities, taken a number of regulatory steps, and has worked with banks to reduce the hurdles to access credit. “Singapore’s financial institutions are strong and by providing banks easy access to funds, they would be better able to intermediate credit to businesses and households and provide essential financial services,” the review notes.

Avoid working for a credit card company

Leaving a bank to work for a credit card firm has suddenly become much less appealing. “Growth in activities auxiliary to financial services – comprising mainly credit card network players – also slowed, after expanding rapidly over the past two years,” says the report, adding that the virus has blighted purchases of big-ticket items. “Credit card companies’ cross-border business has taken a significant hit,” says the report.

Have a confidential story, tip, or comment you’d like to share? Email: or Telegram: @simonmortlock

Photo by Ussama Azam on Unsplash

AUTHORSimon Mortlock Content Manager

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