Finance Smiths

Personal finance apprentices-in-training

When your employer pledges no job cuts

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The long weekend is here and I’m looking forward to celebrating my wife’s 32nd birthday as a family with our baby at home. We are going to have a nice dinner delivered and have a video conference call with her colleagues and friends for them to wish her a Happy Birthday!

Covid-19 has caused a massive disruption to everyone’s lives in so many ways. But we have to find things to celebrate and look forward to. Especially in such difficult and tough times. We may not have been as badly affected but it’s still painful to see such widespread suffering on a global level.

Anyway, it was reported in the news this week that the Singapore banks (DBS, OCBC and UOB) have pledged no retrenchments as a result of Covid-19. Since they are major employers here (especially for locals), this comes as a big relief to their employees. And I’m one of them who finds this reassuring.

It’s a significant step my bank has taken to announce this internally and externally. Something foreign banks have not been able to do so. Such as the bank that my wife works at. There are many differences between working in a local bank and foreign bank. It’s not about whether one is better than the other.

It’s more of which type of bank are you more suited to work at. Taking into account the various considerations of culture, pay and benefits. While my wife is higher paid than me in a foreign bank and prefers the culture there, she carries a higher retrenchment risk. Because a foreign bank is more willing to cut jobs to preserve its profitability.

I’m lower paid in a local bank and the culture can be more difficult to navigate at times. But I carry a lower retrenchment risk because a local bank is more willing to save jobs to preserve its reputation. In times of a crisis, this can mean the difference between losing and keeping your job.

It’s critical that at least one of us keeps our job in a crisis. Because in a crisis, having no regular income drastically changes your life plans for the worst. The longer you stay jobless, the harder it can be to return to the workforce. Trying to find a job when you are unemployed is also much tougher.

The difficulty level rises as you get older. Made worse by the fact that you are likely to be more desperate for a job since you have heavier financial and family obligations. And we are keenly aware of this just by observing our respective offices after Covid-19 became a pandemic. The 1st group of people to panic about retrenchment is the 40 plus year olds. Followed by the 2nd group of people that is the 30 plus year olds like us.

Even though we are in the same industry, we have always worked in different fields within banks. And we are employed by different types of banks, one foreign and the other local. We find ways to diversify retrenchment risk as a couple. It’s how we survive crises by increasing the possibility of us avoiding taking a hit together at the same time.

We have no idea how long Covid-19 is going to last, which is both worrying and depressing. We can’t imagine what the financial & economic costs would be at the end of this crisis. And we don’t know what kind of consequences Governments and Central Banks interventions on such a large scale might have. This is perhaps the most uncertain period of time for us since graduating in 2009 after the Global Financial Crisis of 2007/2008.

So we go back to what we are good at. We focus on keeping our jobs and maintaining our salary income. We stay together as a family and be happy & appreciative of the time we can spend together now that we can work from home. We continue to invest into the equity markets (mostly ETFs, some robo-advisors and a few individual stocks) by value averaging and dollar-cost averaging. We keep a lookout for a bigger property to buy for our expanding family. And we maintain a decent cash balance. Lastly, we don’t overthink and overplan.

The positive effects of Government intervention

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The past few days has been tough. We spent the weekend buying groceries & household supplies from supermarkets to prepare for the lockdown. I refuse to call it a circuit-breaker because it’s essentially a shutdown. And we are better off confronting this as what it actually is. Not give it a nicer sounding name so the people don’t panic. It’s time we grow up.

My wife went back to work on Mon from her maternity leave and started off working from home already. She didn’t have to go back to the office and is still in the process of setting up her remote working capability. She has gone on multiple conference calls to catch up with her colleagues so she knows what to expect in terms of her scope of work for the rest of the year.

It will take time for my wife to settle back into work. And I’m happy her team has been accommodating enough to let her take her time with the process. Even if it means them continuing their wider coverage of work in the short term. While understanding that there will be an acceptable loss of productivity, effectiveness and efficiency for the bank.

This is the reason why my career advice to my wife is for her to stay on in her bank even if she wants to switch job roles. It’s rare to find such an employer in Singapore. Anyway, I’m sure she doesn’t mind working for the same bank/employer her entire career if they treat her well. But things can always change for the worse and we should not be complacent.

My push to work from home has been going badly as my bank struggled to set up our remote working capability. I have been unable to resolve the IT issues and it has been an ongoing source of frustration. And my bank refuses to allow an acceptable loss of productivity, effectiveness and efficiency. With the looming Tues 7 Apr deadline, my anger came to a boil and I snapped.

I started working from home on Tues 7 Apr with a limited remote working capability and practically did nothing most of the day. Just to force the IT teams to prioritise my case since everyone is now more incentivised to resolve my issues. I have been facing increasing pressure from my wife to work from home as she feels my daily journey into the office puts the family at risk.

I agree with her and now that the Singapore Government’s position on this is very clear, my plan is to work from home even with a limited remote working capability. I refuse to jeopardise the safety of my family due to the failings of the organisation/bank that I work at. It’s not worth it.

Anyway, I continue to be impressed by how the Singapore Government is managing the Covid-19 crisis. The Solidarity Budget was announced on Mon 6 Apr with enhanced support measures to the businesses and the people. My view is that they are seriously going all out to protect as many of us as they can in these exceptional circumstances.

I have to admit that I did not account for the level of Government intervention in the Covid-19 crisis. It’s extensive and I can’t believe how far they have been willing to go to support the local economy. The positive effects of this should not be under-estimated as it could be the band-aid that tides us over the recession this year. In fact, this has been happening in countries all around the world.

By staying at home to stop the virus from spreading, the hope is that we can reduce its medical, financial and economic costs. If all of us take the short-term hit, we can hopefully avoid the much bigger long-term hit down the road. Based on the latest data, the curve might finally be starting to flatten. And that’s cause for optimisim indeed.

In the meantime, our jobs could possibly be saved by the Government’s support measures. At least until the end of this year. Which could be all we need to tide over this crisis so that the economic recovery can start next year. If necessary, we can even defer our mortgage payments to next year. Not having to worry about our housing loan for now is a big weight off our shoulders.

Most importantly, this means that even if one or both of us end up losing our jobs, we don’t have to worry about the monthly instalments. Which is the largest proportion of our expenses and could really cause problems for us. The worst outcome being we have to sell our investments to fund the repayments or even the property itself to get rid of the debt.

This is a crucial month for us as we stay home to spend more time together as a family, while stopping the spread of the virus. It’s been nice for me to see the baby more often now that I’m at home on the weekdays. We are striving hard to achieve full remote working capability so we can work from home on a more permanent basis going forward. Let’s get through this together!

Holding steady and waiting while normalising work from home

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The equity markets have kind of flattened in the last week with no real direction going up or down. They seem to be waiting on more data from the real economy to determine the extent of economic damage done by Covid-19. Which is bad and getting worse based on the recent economic indicators.

In flat equity markets, weekly Dollar-Cost Averaging using our salary income for the month works well to keep increasing my positions while they try to find a direction. Because this can drag on for quite a while and I don’t want to risk investing my remaining cash when the equity markets are going nowhere.

The question is how much of the economic damage has already been priced in by the equity markets. Before pressure builds for it to fall further past the mini-floor established. Since my investing strategy is to average downwards, that mini-floor forms the last cost prices of my individual stocks and ETFs.

If the equity markets fall past that mini-floor, I will continue to average downwards until the next mini-floor. And S$150,000 of investing cash has already been set aside for this. I’m going to keep this up until I find the bottom of this market crash. At which point, I should have invested most of my cash balance. Then I rebuild it in the recovery while continuing to Dollar-Cost Average and wait again for my next big opportunity.

This investing plan requires a lot of patience to pull off and a right combination of factors. To be honest, it would have been a lot tougher to execute on my strategy if not for the Singapore Government’s intervention into the economy through the Unity and Resilience Budgets. And even the additional measures and actions taken afterwards.

I’m not referring to the cash handout even though it’s a good to have. The most important thing they did for us (as corporate salaried employees of banks) is to subsidise the wages of local workers to keep us employed. It makes a big difference to staff costs decisions made by banks. Especially when the subsidies are significant.

Without such Jobs Support and Wage Credit Schemes, there would have been large-scale retrenchments at banks by now. Instead, banks are trying to protect jobs by sharing the pain internally (through hiring, pay and bonus freezes/reductions) and externally (through relief measures provided to the customers while taking away some of the benefits). This comes at the expense of shareholders as banks are likely to cut their dividends significantly.

But banks will do this because the message from the Singapore Government is clear. Their foremost concern is jobs and the expectation is that employers should do everything they can to not retrench staff. Given how the Singapore Government is essentially paying for part of our wages now. It almost becomes a transfer of wealth from the country to us. By allowing us to keep our jobs that we would otherwise have lost without such intervention.

The next most important thing they did for us is to strongly drive home the message that employers must allow their staff to work from home as far as possible or risk facing penalties. This has forced the banks to invest in improving their operational capabilities to enhance the hardware and software. To allow their employees to work from home. Costs that they would otherwise not have incurred because it’s not revenue generating.

The effects of this push might actually have the most valuable long-term impact on our jobs. By normalising work from home arrangements, it would address a big problem for us as corporate employees. The fact that we have to travel into and out of the office for 5 working days out of 7 days in the week.

We waste travel time and dealing with traffic (whether taking public transport or driving a car) is always a headache. And we have to clock the minimum number of working hours in a day before we can leave the office. Which leaves us with less time to spend with our families on a working day and causes us to be tired over the weekends.

There are many benefits to working in a corporate job – higher than average stable pay, access to medical & other benefits, coverage for training & higher education courses and professional & personal social interaction. But these benefits come at a high cost of losing time to the office. And dealing with office politics.

Once you can reduce these costs, the benefits of a corporate job really start to outweigh them. Because we start gaining flexibility over our working hours and what we spend our time on. Yes, this may be the largest work from home experiment ever conducted and it won’t be permanent. It’s not even going well at the moment.

But the positive effects are here to stay. My wife is going back to the office next week on Mon to set up her soft token that allows her to work from home the next day onwards using her own personal laptop. I have collected my work laptop and I’m in the processing of setting up my soft token by next week so I can work from home too. While there still are many technical and operational issues to be resolved with this work from home setup, this is now a high priority item that the banks are focused on.

We might never reach full work from home arrangement capability but that’s okay. Because we also don’t plan to work fully from home anyway. It can be isolating and difficult to maintain over a long period of time. We want to be in the office too, just not all the time. If we can even achieve partial work from home arrangement capability, that’s good enough for us. Especially after the Covid-19 virus situation normalises.

Because the world and the way we operate would have changed by then. Just by having this work from home capability, we are already in discussions with our managers to make this a more permanent fixture of the way we work in the office going forward. This is actually our main objective that we are striving for out of this whole life-changing impact of Covid-19.

We plan to work from home at least 1 day a week even after the situation normalises. On stuff that doesn’t have to be done with bank systems and applications access. For the remaining 4 or less days in the week that we go into the office, that’s when we conduct our stakeholder meetings and access the bank systems and applications to work on stuff that require it. We want to build the flexibility into our corporate jobs and that is the future we are aiming for.