Advancements in technology and the COVID-19 pandemic have significantly transformed the way we live and work. Global economies have been disrupted and remote work arrangements are now the norm. This has accelerated conversations on what the future of work will look like and how businesses can continue to innovate, grow and in some cases, survive.
In Singapore, the future workplace is slated to arrive earlier than expected. Mercer’s 2019 Global Talent Trends Report revealed that last year, 60 per cent of Singapore companies already had plans to invest more in automation, with 43 per cent of respondents redesigning jobs, such as honing in on critical future-focused skills, to prepare for the future of work. These actions highlight the substantial transformations taking place at all levels of organisations – from people to processes. This shift needs to be complemented with greater financial literacy, because sound financial health is fundamental for Singapore’s workforce and their ability to adapt to the changes.
So how do we help Singaporeans overcome the challenges brought on by globalisation and now COVID-19? In our Financial Health for the Future of Work in Singapore study, we observed how trends like the GIG economy, automation, entrepreneurship and the evolving socio-economic changes among the local workforce are impacting the future workplace. Our research also identified actionable ways in which financial institutions, in partnership with the government and industry leaders, can respond to support Singaporeans financially for the years to come.
Rise of the online GIG economy
There is an increase in the GIG economy as more Singaporeans are choosing to take up jobs that give them both flexibility and independence. Those surveyed in this line of work were generally financially healthy, with 73 per cent of respondents indicating control over their monthly income. The data also revealed the financial resilience of freelancers, with 77 per cent saying they can cover three or more months of expenses with their savings should they lose their main source of income. And this trend is expected to continue and grow, given the uncertainty of jobs during the pandemic.
Effect of automation, machine learning and AI
The increased adoption of automation, machine learning and AI across industries will impact the current workforce, prompting workers to upskill. 77 per cent of Singaporeans surveyed believe their jobs will be impacted by the evolution of new technologies in the next five years, 7 per cent higher than the global average of 70 per cent. Our study indicated that 34 per cent of workers in highly automatable jobs reported they were unable to cover three months of expenses with their savings if they lost their jobs, and another 54 per cent either paid a bill late or incurred additional fees or interest in the previous year. This tells us that the growing concerns of Singaporeans over the rise of automation needs to be addressed.
The need to support entrepreneurship
The current economic situation will give a boost to entrepreneurs, especially for small and mid-sized enterprises (SMEs), who will require better financial management tools. Our study found that in Singapore, SMEs make up a staggering 99 per cent of all businesses. They contribute to 48 per cent of Singapore’s GDP employing 72 per cent of the country’s work force. Furthermore, 65 per cent of the entrepreneurs in Singapore reported consistent income each month, a stronger outlook as compared to the global rate of 46 per cent. Yet while entrepreneurs reported steady financial health, in contrast, 57 per cent of Singapore SMEs indicated they were compelled to pay a bill late and had to pay interest as well.
Socio-demographic changes in the workforce
Our survey indicated that nearly 80 per cent of the millennials and Gen X-ers received a consistent income and were able to cover their monthly expenses. What’s more, 66 per cent of millennials and 46 per cent of Gen X-ers showed confidence about their ability to increase their income over time. The data is positive and emphasises a growing demand for greater flexibility in the workplace and customised digital financial services to support this growth.
These four key trends shed light into how the workplace will evolve in the near future. They also underline an imminent need to take action and invest in the financial health of Singaporeans with two main recommendations.
Tailored products and financial literacy for the masses
To support Singaporeans, tailoring financial products, investing in financial literacy and offering them personalised experiences is critical. For example, while banking services are still being used by the public, their products may be too broad and unable to cater to specific customer segments like entrepreneurs or freelancers. Financial institutions should partner with the government to identify underserved sectors to create tailored and flexible products meeting the needs of each segment of society.
Fintechs can go one step further by integrating financial education into the design of their products. This includes automated mechanisms that check for the appropriateness of a financial product against a user’s needs or self-check quizzes that gauge a user’s product understanding before use. Companies can also leverage emerging tech like automation and application programming interfaces (APIs) to enhance their offerings, thereby protecting users and empowering them to choose products that help them take prudent financial decisions.
Paving the path to a financially healthy future
The Singapore government recently announced an additional $8 billion support package to tide the economy through COVID-19. While government intervention and support are important during a recession, the government cannot tackle this problem alone.
For solutions to be truly practical and future-looking, there is a need for a strong public-private partnership.
As everyone around the world navigates through uncertain times and a bleak economic outlook, financial health becomes even more significant. Now more than ever, setting up the nation’s workforce with the right tools and knowledge is imperative to ensure they are financially secure in the long run.