Freelance filmmaker Anita Reza Zein had grown used to jam-packed production schedules requiring her to put in long hours and run on little sleep. Until Covid-19 struck.

Today, the talented Indonesian is suddenly free. With five projects on hold and many more potentially cancelled, she now spends her time working on a personal project, doing research for her work and occasionally going for a ride on a bicycle.
“I feel calm and patient although I’m jobless. Maybe because it’s still the third week [of social distancing] and I still have enough savings from my previous work,” said the 26-year-old, who is from Yogyakarta. “But I imagine life will become tougher in the next few months if the situation gets worse.”

Like her, millions of youths are now part of a job market in Southeast Asia that has been ravaged by the coronavirus pandemic. They are the unlucky cohort of 2020 whose fortunes have changed so drastically, so quickly.

Just three months ago, many eager graduates were about to partake in a strong economy and possibly land decent pay cheques.

Today, job offers are being withdrawn and hiring halted, leading to a spike in regional youth unemployment in the short term. In the long term, the effects on the Covid-19 cohort could lead to wider social and political problems.

JOB MARKETS SHUT

The virus’ impact on economies and the job market in the region has been swift and devastating. Borders have been slammed shut, workers ordered to stay at home, and thousands of companies closed every week.

The biggest problem is the lack of certainty about how long this will last – the longer the governments keep their countries on lockdown, the worse the economic impact.

In Indonesia, for example, the virus has caused almost 2.8 million people to lose their jobs, according to the Manpower Ministry and the Workers Social Security Agency. Likewise, in Malaysia, an estimated 2.4 million people are expected to lose their jobs, going by data from the Malaysian Institute of Economic Research (MIER).

Thailand is bracing itself for a 5.3 per cent contraction in GDP for the full year, the worst since the Asian financial crisis in 1997.

“We think about seven million jobs have been lost already, and the figure will hit 10 million if the outbreak drags on for two to three more months,” said Kalin Sarasin, council member and head of the Thai Chamber of Commerce.

For young jobseekers, the outbreak of the Covid-19 pandemic could hurt even more, with companies unwilling to open up new jobs for them.

“My clients who were open to fresh graduates previously have realigned searches [for candidates] who have at least one year of experience, as it’s a lot faster for someone with experience to scale up quickly and contribute,” said Joanne Pek, a recruiter at Cornerstone Global Partners’ Singapore office.

For many small and medium-sized enterprises (SMEs) such as Singapore-based restaurant chain The Soup Spoon, saving jobs – rather than recruiting – is the priority.

“We don’t want to let anyone go during this period, so we’re focused on protecting jobs,” said co-founder and director Benedict Leow, who employs some 250 workers.

THE COVID-19 COHORT

The looming economic downturn could have distinct consequences for the Class of 2020 that will outlast the economic downturn itself.

For one thing, the paucity of jobs could result in the Covid-19 cohort becoming a “lost generation” of sorts, said Achim Schmillen, a senior economist at the World Bank Social Protection and Jobs Global Practice.

“Research from around the globe shows that graduating in a recession can have significant and long-lasting impacts that can affect the entire career. In particular, it can lead to large initial earnings losses which only slowly recede over time,” he said.

Economics professor Jeff Borland of the University of Melbourne said that international studies showed that what happened to people when they first entered the labour market would affect them for the rest of their working lives.

“Many international studies have shown that trying to move into employment during a major economic downturn cuts the probability of employment and future earnings for a decade or more.

“Why this occurs is less well-established. Reasons suggested include being forced to take lower-quality jobs, losing skills and losing psychological well-being,” he said in a piece published on The Conversation website.

This could create “lasting scarring” on the graduates this year, said labour economist Walter Theseira.

“If their careers start badly, it would affect their earnings for a number of years because they would lack the same experience as peers who started in a more secure position,” the associate professor of economics at Singapore University of Social Sciences said.

Shrinking salaries and the downsizing of companies mean that graduates might have to seek out professions outside their areas of study to survive, said Grace Lee Hooi Yean, head of the Economics Department at Monash University, Malaysia.
She said youth unemployment in the country, which stands at 11.67 per cent, could rise sharply.

“This looming crisis could trap a generation of educated and capable youth in a limbo of unmet expectations and lasting vulnerability if the graduates are not ready to face reality and adapt to the new challenges,” she said.

This is fast becoming the reality for final-year medical student Rebecca K. Somasundaram, who has been left without a job due to the pandemic.

After being offered a residency programme at a top specialist hospital in Kuala Lumpur, she was notified a month ago that her placement had been made void until further notice. This has thrown the 24-year-old’s plans into disarray as she was hoping to enter the workforce soon to pay off her student debts. Her plans to get married next year have also been put on hold temporarily.

“I am in constant talks with the hospital to see if there is any way I can join them soon but seeing how things are unfolding so quickly, I am slowly losing hope,” she said.

Over in Indonesia, the pandemic will trigger job losses on a national scale. To combat this, the government would need to introduce strong fiscal measures and beef up its social protection policies, said the country’s former minister of finance Muhamad Chatib Basri.

Many people on lower incomes tend to work in the extraction industry, such as mining and palm oil, and these are the first industries hit due to the global slowdown.

“The rich will be able to brave the storm, but the poor have no means to do so,” he said.

SPECTRE OF 1997

With partial lockdowns imposed in the capital of Jakarta, more needs to be done to ensure that vulnerable citizens have access to food and financial support.

Without government intervention, economic woes could soon translate into political instability, a scenario last seen in the Asian financial crisis.

In 1997, waves of discontent sparked racial riots in Indonesia that toppled the country’s long-time strongman Suharto, while in Thailand a political crisis created the conditions for populist leader Thaksin Shinawatra to rise.

Rising discontent could have serious implications at the ballot boxes, warned Basri, who said young voters were a key voting bloc for President Joko “Jokowi” Widodo.

In last year’s general elections, Jokowi proved a hit among the lower-educated youth who had benefited from the creation of largely unskilled jobs during his tenure.

“With more young people expected to become unemployed in the coming months, things will only get worse from here,” said Basri, who added that the country’s youth unemployment stood at almost 20 per cent in 2018.

Indonesia, which has 268 million people and is Southeast Asia’s largest economy, had 133 million workers as of last August, according to official data.

Close to 10 per cent or about 12.27 million are university graduates but among this group, about 5.67 per cent or some 730,000 were unemployed. This was higher than the country’s overall unemployment rate at that time, which was 5.28 per cent.

GETTING IT RIGHT

Economists say, however, that all is not lost. Much will depend on policy and how governments focus on battling the virus on the public health and economic fronts. They point to Singapore, which has launched a robust response to the crisis.

On April 6, the Singapore government announced its third budget in two months to help companies and households tide over the crisis. In all, Singapore’s total stimulus package, which aims to save jobs and keep funds flowing to companies, will cost the government a massive S$59.9 billion (US$42 billion).

The Singapore government was also preparing for a labour market that would be reluctant to hire fresh graduates on a full-time basis, said Theseira.

“There are plans to implement large-scale subsidised traineeships, which may be more palatable to companies which are worried about taking on permanent headcount this year,” he noted. “As the economic situation improves, they can be converted to permanent positions.”

While jobs were being created for fresh graduates, many would still have to temper their expectations, such as taking jobs with lower starting pay, said DBS Bank economist Irvin Seah.

“There are still some jobs to go around. There are still some companies that may need workers. But they will need to be realistic,” he said.

For instance, despite the downturn, Singapore telco Singtel expects to recruit over 300 fresh graduates for various permanent positions this year, according to Aileen Tan, the company’s Group Chief Human Resources Officer. Many of the new hires will be in new growth areas such as the Internet of Things, analytics and cloud.

Other companies that continue to hire include those in tech across the region, including e-commerce giant Shopee, food-delivery service Foodpanda and Amazon.

In Australia, Borland suggested helping young people to remain plugged into the labour market through government-funded paid internships, or even offering them loans to go for further studies and prevent a spell of unemployment.

For now, while some young jobseekers are taking a wait-and-see approach, the reality is hitting hard for others.

Final-year National University of Singapore student H.P. Tan had all but secured a job at a public relations firm last month, after three rounds of interviews.

The Faculty of Arts and Social Sciences undergraduate was rejected via an email from the agency, which said that they could no longer hire after Covid-19 started to drastically cut business.

“When I got that rejection, it was a turning point. I didn’t think I would be directly impacted,” said the 23-year-old.

“I also applied to a few other agencies but the response has been slow, so I am now freaking out at the possibility of not being able to find a job after graduation.”