Duty-Free Job Cuts Expose Singapore’s Sensitivity

(Bloomberg) --

DFS Group Ltd.’s job cuts in Singapore have prompted a rebuke from the city-state’s authorities, shining a spotlight on how handling retrenchments are a delicate matter in the country that’s anticipating elections soon.

The duty-free operator last week formally terminated jobs of its airport workers, effective in June when it exits selling alcohol and cigarettes at Singapore’s Changi Airport. DFS also told some of its employees at other outlets they would no longer have jobs -- some effective immediately, some ending over the next several months, the company said Thursday in response to Bloomberg queries.

The move sparked complaints about the severance packages offered, and how the LVMH-backed travel retailer could have handled the retrenchment better in communicating with the workers. It also prompted a weigh-in by the city-state’s manpower minister.

“Retrenchment is never easy, but handling it sensitively and responsibly can go a long way in helping employees through the transition,” Josephine Teo said in a Facebook post on Saturday. “The company is now adjusting its approach and taking appropriate steps to address the concerns of the affected employees.”

DFS will work with the government and local labor groups to provide support such as personalized career coaching, job-matching and job fairs for affected staff, the company said in its statement. Better severence packages were also offered on Wednesday to retrenched employees, which number at around 60 people, according to Channel News Asia.

Export-reliant Singapore has acutely felt the pressures of the U.S.-China trade war, with officials lowering 2019 growth forecasts to almost zero. With elections that must be held by April 2021 on the horizon, ministers have been reassuring the government will step in with measures to help the economy if needed, though job losses so far aren’t yet a cause for alarm.

DFS, in addition to being Changi’s largest tenant, is also its oldest having operated for nearly 40 years. The company is estimated to have generated S$590 million (US$426 million) in sales last year, according to the Moodie Davitt Report. However, it decided not to renew its contract to sell at the airport.

Recent job cuts were in response to a “challenging travel retail environment, compounded by steep losses incurred by the liquor and tobacco concession operations at Changi Airport,” it said, adding it continued to employ almost 1,000 people in Singapore. DFS said in August that it plans to expand in other parts of Asia, including in Macau and Hong Kong.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editors responsible for this story: Joyce Koh at jkoh38@bloomberg.net, Derek Wallbank

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