Great Resignation to Great Layoffs: Does the recent tech layoffs signal an industry downturn?
In December last year, a poll by jobs portal Indeed revealed that one out of four Singapore workers are planning to leave their current employer in the first half of 2022.
The survey that polled 1,002 workers in Singapore aged between 16 and 55, also found that nearly half were unsure if they would stay in the current job for the next six months.
According to Indeed, these suggested a ‘Great Resignation’ trend in 2022, a phenomenon similar to other first-world countries like the United States and Europe, where workers’ needs are changed by the pandemic.
However, it looks like the recent wave of tech layoffs have shifted the job trend to ‘Great Layoffs’ instead.
Blame the bad economy
Basically, rampant inflation, coupled with fear of stagflation and recession, has led to a shift towards belt-tightening now.
Tech companies are often viewed as the bellweather for the broader economy. Investors in tech need a relatively high-risk tolerance, as these companies — especially startups — can take a long time to turn a profit.
Companies in tech are often willing to forgo profitability for growth, when the economy is expanding.
But that has not been the case lately with supply-chain interruptions, the Russia-Ukraine war, crashing stock markets and other red-alert economic factors. It has gotten pretty tricky to a point that Tesla founder and CEO Elon Musk told his employees that he has a “super bad feeling” about the economy.
It turned into a ‘Great Layoff’ last month, when firing “exploded“. According to layoff tracker Layoffs.fyi, job cut announcements in tech in May were 10 times the number in the first four months of the year. Specifically, 17,000 tech workers were laid off in May alone.
Tech and crypto firms are feeling the heat
The most recent layoff was crypto giant Coinbase, laying off about 1,100 employees in response to a volatile crypto market.
According to Bloomberg, Coinbase had hired aggressively in recent years, with its workforce ballooning by about 1,200 employees this year. Now, the company even plans to reduce its workforce by 18 per cent after coming out of a long winter in which crypto value has dipped.
CEO Brian Armstrong warned that “we appear to be entering a recession after a 10-plus year economic boom.” He admitted that the publicly traded company, which has a market value of more than US$13 billion, “grew too quickly” in 2021 as it scaled up to take advantage of the crypto craze.
The move by Coinbase came a day after cryptocurrency company BlockFi, which had grown nearly sixfold in 2021, announced it was laying off about 250 people.
In May, Microsoft told Bloomberg that it was slowing hiring for its Office, Windows, and Teams groups to better prepare itself for the coming fiscal year and contend with the current economic environment.
The tech giant reported strong Q3 earnings, with a 26 per cent year-over-year increase in cloud revenue, but in early June, the company revised its Q4 revenue and earnings guidance downward, citing the impact of foreign exchange fluctuations.
Paypal and Meta on the other hand, have publicly announced hiring freezes, while Snap — the parent company of Snapchat — confirmed it is slowing hiring as it misses revenue targets.
Meanwhile, Spotify, the world’s largest online streaming service, has been on a spending spree, plowing cash into its podcast division in an effort to dive deeper into the higher margin business. Regardless, it is not immune to the current economic backdrop.
According to Bloomberg, Spotify will cut its hiring plans back by 25 per cent, meaning the company will not stop hiring new employees, but will bring on fewer workers than originally expected in the year ahead.
Last month, Netflix also confirmed it would cut about 150 positions of the streaming giant’s 11,000-workforce in an effort to reduce costs amid slowing revenue growth.
“These changes are primarily driven by business needs rather than individual performance, which makes them especially tough as none of us want to say goodbye to such great colleagues,” a Netflix spokesperson said in a statement.
Tesla, which employs over 100,000 staff will also be cutting down its staff. In Singapore, the electric vehicle manufacturer has already laid off its country manager, with Musk also telling employees to return to work in office or work elsewhere.
In May, Twitter also froze hiring and said it would retrieve some job offers ahead of a buyout offer from Musk. The social media company also scaled back on costs such as travel, consulting, and marketing, according to the memo.
Closer to home, Singapore-based e-commerce giant arm Shopee announced last week that it is laying off some employees in its food delivery ShopeeFood and online payment ShopeePay teams. It’s not only regional operations that would feel the brunt — Shopee also said that it will also cut staff in Mexico, Argentina and Chile, as well as a cross-border team supporting the Spanish market.
Sea Limited, the parent company of Shopee, plans to also close its early-stage pilot in Spain, after announcing plans to launch online sales in the country last October.
For this year so far, tech companies worldwide have laid off a total of 35,000 workers, according to Layoffs.fyi.
LinkedIn News editor Andrew Murfett said in a blog posting, “This is the most significant number of lost jobs in the sector since May 2020, at the height of the pandemic. Much of the tumult has occurred in venture capital-backed firms as investors abandon risky bets and seek immediate returns.”
Should we be concerned?
No doubt there is a lot of anxiety right about the labour market at this point.
However, it’s not all doom and gloom. Its effect on Singapore’s job market is limited as there continues to be a strong hiring demand for IT professionals.
A quick check on mycareersfuture revealed that there were about 9,000 permanent IT job listings. In particular, some roles that are high in demand include software developers, business analytics professionals, data scientists, and project managers.
Recruitment agencies also expect firms to ramp up tech hiring in the next one to two years, with pay jumps of between 15 per cent and 30 per cent, up from 10 per cent to 15 per cent.
A recent report by The Straits Times revealed that salaries for tech roles in Singapore are set to rise, and particularly those with unique skills may be offered “exorbitant” pay packages.
To add on, the tech layoffs is not necessarily a bad thing. As experienced tech professionals leave tech firms, they either start their own companies or join firms in other sectors, which will help accelerate innovation either way.
Featured Image Credit: Reuters / Cripto Tendencia / LightRocket via Getty Images / Tesla
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The pros & cons of Malaysia’s RM1,500 minimum wage for employees & businesses
TLDR: Full video explainer available below!
As of May 1, 2022, the minimum wage in Malaysia is RM1,500, an increase from the previous RM1,200, which was the standard since February 1, 2020. This amendment applies to government-linked companies and private sector companies with a minimum of five workers.
Since it may be challenging for micro, small, and medium-sized enterprises (MSMEs) to immediately adhere to the new minimum wage, they will be given extra time before having to comply with it.
According to Datuk Seri M. Saravanan, the Minister of Human Resources, the exemption for MSMEs will last for about two years.
While the 25% jump is definitely cause for celebration, how does the increment really affect the local workforce, employers, and the economy? Here are some pros and cons of the RM1,500 minimum wage.
Pros
1. Better quality of life
Based on government data released in January 2022, the local consumer price index (CPI) rose 3.2% in December 2021 compared to 2020, due to an increased price of food and fuel.
Given these hikes, the increase in the minimum wage would provide a more balanced income for Malaysians.
2. Better economic growth
The increased minimum wage means employees will be able to keep up with the standards of living, since they’ll have more spending power.
This should then lead to higher consumption, which in turn leads to economic growth.
Cons
1. Higher prices of goods and services
Not all employers would be able to meet that standard and pay an additional RM300 every month to each underpaid employee. Of course, there is still some time before businesses have to up their wages as per the new minimum wage, but it can still be a challenge.
Employers might also have to offer increments to existing employees who may already be earning above the minimum wage as these employees may expect a boost in remuneration due to seniority and experience.
Ultimately, this might lead to higher prices of goods and services to make up for the profit margin.
2. Companies may downsize
If companies are unable to keep up with the increased wages, they may end up having to downsize and reduce labour costs.
This is worrying as it would contribute to the unemployment rate in Malaysia, which still hasn’t gone back to the pre-pandemic figure, which was 3.3% in 2019.
3. The jump might worsen the economy
The Malaysian Employers Federation (MEF) said that the RM1,500 minimum wage would only benefit foreign workers.
The argument is based on the assumption that the workers would end up sending more money back home instead of spending the earnings in Malaysia.
The future of Malaysia’s minimum wage
Some expressed confusion over the new nationwide minimum wage because the former minimum wage had stipulated a two-tiered approach.
While urban districts fell under the minimum wage of RM1,200, rural districts were given a minimum wage of RM1,100.
Having a higher and standardised minimum wage of RM1,500 now will be beneficial, especially in a time where the price of goods and services seems to always be rising.
But, it’s still important to consider how the increase will impact the economy in the bigger picture.
Watch our video where we go more in-depth on the pros and cons of the RM1,500 minimum wage here:
- Read other salary-related articles we’ve written here.
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Breaking down the events that led to the Terra Luna crash, and the Luna 2.0 revival plan
The downfall of Luna has been highly circulated over the past month or so.
Luna’s prices plummeted from US$87 on May 5, 2022, to US$0.0005 on May 13. Terra’s widely adopted stablecoin, UST fell from the peg of 1:1 USD to 0.03:1 USD for the lowest price.
For the uninitiated, Luna is the native cryptocurrency of the Terra Ecosystem. Terra is a blockchain network that specialises in stablecoin creation.
The damage to the UST stablecoin also affected the other cryptocurrency markets, even triggering the firesale of BTC and other stablecoins, bringing about systematic havoc that’s still happening today.
So how did this all happen? We look at the events that took place surrounding the Terra Luna crash based on a new report by Huobi Research Institute (Huobi).
But first, understand how the Terra Ecosystem works
Founded in 2018 by Do Kwon and Daniel Shin of Terraform Labs, the Terra protocol creates stablecoins pegged to the US dollar, South Korean won, and euro, amongst others.
Stablecoins exist to make cryptocurrency prices more predictable. In theory, Stablecoins are meant to have a fixed value of around the currency that they are pegged to so they can be a more reliable store of value for investors, in contrast to the extreme volatility of Ethereum, Bitcoin, etc.
Another benefit of stablecoins is that they exist on a blockchain that is accessible to global users, so users don’t need multiple international bank accounts to send crypto to their friends in other countries. With stablecoins, they just need one crypto wallet.
TerraUSD (UST) is Terra’s stablecoin. Unlike stablecoins backed by fiat currencies, UST is backed by its sister token, Luna, and relies on algorithms to maintain its US$1 peg.
To peg a TerraUSD (UST), a USD value of Luna is convertible at a 1:1 ratio with UST tokens. If UST’s price is, for example, at US$0.98, arbitrageurs swap 1 UST for $1 of USD and make a profit of US$0.02. This mechanism increases UST demand and also reduces its supply as the UST is burned. The stablecoin then returns to its peg.
When UST is above US$1, say at US$1.02, arbitrageurs convert US$1 worth of Luna into 1 UST and make US$0.02. The supply of UST increases, and demand for UST also decreases, bringing the price back to peg.
Hence, Luna is meant to serve as a kind of shock absorber for UST’s price. For this stabilising price mechanism to work, users can redeem 1 UST for US$1 worth of Luna, even if UST is worth less than US$1.
But this mechanism would later lead to one of the reasons for Luna’s downfall.
The downfall of Terra Luna
1. TerraUSD joins the pool, and alleged attackers find vulnerabilities
Huobi’s report outlined that the coordinated attack started with 3pool.
Did you know: The most popular liquidity pool on Curve Finance is 3pool, which comprises three of the most popular dollar-pegged stablecoins, DAI, USDC, and USDT (3CRV). It essentially allows users to swap these stablecoins in a capital-efficient way.
In the meantime, Terraform Labs prepared for the 4pool launch, and more UST liquidity was deposited into the curve. According to Forbes, this was followed by a US$350 million sale of UST for USDC on the curve, by a supposed attacker that caused a significant imbalance between the UST (85%) and 3CRV (15%) in the pool.
Subsequently, there was a bank run on Anchor, resulting in users rushing to pull out their funds and swap out of UST, as stated in the same Forbes article.
Did you know: Anchor Protocol (Anchor) is a lending and borrowing protocol that provides crypto natives, fintech companies, and investors a stable high interest rate of up to 19.5%.
2. An arbitrage trade
As the defence liquidity pool played out, the alleged attacker kept threatening the sale of UST as an arbitrage trade, reported Huobi. Arbitrage is the practice of buying and selling assets in different markets.
With the knowledge that defences are down in guarding the peg, the attacker launched a full-scale swap on the curve.
This resulted in an imbalance of UST in the curve pool, despite the algorithm’s attempts to restore balance.
Hence, this imbalance intensified the supply of Luna in the market.
3. The big short
The alleged attacker is now aware that the peg cannot be guarded quickly with an external liquidity pool. This opened up the execution phase for the attack plan, the Huobi report stated.
After the 4pool UST crashed, depositors quickly withdrew UST and swapped to Luna. The swap resulted in a selling pressure of Luna, which reduced Terra’s liquidity as the primary source to buy back UST.
In response, the Luna Foundation Guard (LFG)—the organisation mandated to build reserves supporting the UST peg—sold assets like BTC and depleted all its reserve assets in an effort to further boost the value of UST.
However, the effort ultimately failed, resulting in the whole Terra chain suffering from a liquidity crisis where the entire value of Luna could not balance out the value of UST.
4. Luna’s supply inflates
As UST is convertible at a 1:1 ratio to a dollar’s worth of Luna. Arbitrageurs redeemed UST for Luna at discounted prices.
This resulted in more Luna being minted for each UST burnt, creating a hyper-inflationary loop in Luna’s supply. Luna’s value rapidly depreciated as arbitrageurs scooped up UST, burnt it, and minted Luna, then dumped that Luna on the market.
The benefit of the mechanism is that UST could re-peg if it worked, but the risk here is that Luna could go to zero. In that case, UST would also go to zero.
Eventually, the worst-case scenario played out. Both Luna and UST lost virtually all their value in a matter of days.
The revitalisation plan
Almost a week after the Terra Luna collapse, Terra’s founder, Do Kwon announced a revival plan of the cryptocurrency on Twitter.
The new governance proposal suggests creating a whole new blockchain, with coins under the same name. Therefore, the depleted network will be renamed Terra Classic, and Luna to Luna Classic, mitigating the need for the UST stablecoin altogether.
To incentivise investors, Terra airdropped new Luna tokens (otherwise called Luna 2.0) to Luna Classic stakers, holders, the remaining UST holders, and several app developers of Terra Classic.
The new Terra network went live during the final week of May, and traded on exchanges including Bybit, Kucoin, Huobi, and Binance.
On its first day, the cryptocurrency seemingly had a bright start, though its price fluctuated greatly. It’s worth noting that the price has varied drastically on different exchanges, and was largely attributed to the trading volume.
All in all, despite the undoing of Terra Luna in the past month or so, reports point to a certain optimism from investors and traders for the new Terra 2.0.
However, without the UST as the unique selling proposition for Terra 2.0, the question surrounding the value and attractiveness of Luna is still up in the air for now.
- Read other cryptocurrency-related articles here.
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How this S’pore startup is competing with food delivery giants and championing users, hawkers
After completing his university education in Canada, Raphael Kan co-founded an investment management firm in San Francisco and joined a Shanghai-based startup as the Chief Financial Officer (CFO).
When he was in Shanghai, he came across a problem in the food delivery industry and seized the opportunity to develop a solution.
Like most working adults, Raphael found it hassling to find affordable, yet authentic Shanghainese fare on food delivery platforms. This was also a problem he couldn’t avoid in Singapore, where he was always presented with the same few options on delivery platforms.
That was when the idea sparked — “I thought it would be really useful if we can find a sustainable way to work with the best street food vendors and independent eateries to create a food delivery service”, he shares.
That was how he came up with the idea to start up Singapore-based food delivery service Livingmenu in 2018.
Bridging app users with the local food scene
Keeping in mind the exasperation that he and other delivery app users face, Raphael founded Livingmenu on the basis of creating a world where people can eat well affordably, conveniently and make a positive social impact all together.
As an avid food lover, Raphael finds the local food scene’s inaccessibility to customers via delivery applications a pity. These local hawkers and independent eateries embody Singapore’s local culinary culture, but they seem to be missing out on leveraging the rise of on-demand food deliveries unlike quick service restaurants.
This was why Raphael made the effort to ensure that Livingmenu offers them the necessary connections with Livingmenu riders to deliver meals to customer’s doorstep — with no markup, no minimum order and no hidden cost.
For hawkers, signature dishes can be prepared on a bulk basis via Livingmenu’s pre-order model, which maximises their efficiency during under-utilised hours before the lunch crowd comes in. In return, these hawkers can also receive feedback on the reception of their menu that can help them improve.
Raphael highlighted that Livingmenu’s commission scheme is also “lower than the typical commission charged by on-demand platforms”.
To strengthen the connection between users and the people behind the local food scene, Raphael and his team have recently published the Livingmenu Guide.
The guide introduces affordable dishes from the hawkers and eateries that are available on the app for less than S$10 a month so users can keep themselves updated on hidden food gems in Singapore.
Not your typical food delivery app
Besides the effort to connect Singapore’s local food scene with its users, Raphael shares that there are other reasons that allow Livingmenu to stand out from other food delivery platforms.
He notes that on-demand food delivery users tend to choose among the same few vendors every time because they are the only ones available in the five kilometers radius where delivery fees are considered reasonable, not to mention having to pay a peak hour surcharge at times.
In contrast, Livingmenu delivers affordable meals from Singapore’s top-rated vendors. Charging a flat fee of under S$3.95 for up to 30 kilometres radius, Livingmenu offers affordable delivery without compromising delivery speed, since they deliver by car, with a few full-time drivers and close to 50 freelance drivers.
Users can even refer to a daily-revolving menu to mix and match orders from up to eight vendors in a single delivery.
While on-demand food delivery resembles more of a logistic business, Livingmenu aims to focus on a different ball game to solve the inefficiencies in today’s food service value chain. According to Raphael, this involves optimising the utilisation of manpower and kitchen space during the off-peak hours.
Challenging adversities
However, setting up Livingmenu was not always a smooth-sailing journey. “[We] have to constantly adapt to the latest market feedback,” says Raphael.
He stands firm with his mentality to continuously innovate, instead of caving in to accept the status quo of how things are done in the industry, which in itself is a challenge.
Before the onset of Covid-19, Raphael highlighted that Livingmenu focused on business-to-business (B2B) as their initial go-to-market strategy and operated a cloud kitchen. However, their revenue dwindled to zero.
“[We] knew we had to quickly adapt to the behavioural change in order to survive. This eventually led to the development of the food delivery service. Looking back, it’s definitely more of an opportunity because we were able to innovate and capture new demands in the aftermath.”
Slowly, through earning the trust and support from their vendor partners, delivery partners and customers, incremental changes were made and Livingmenu continued to grow and improve from there.
“We knew very quickly after our launch that this is going to be a hit because of the high number of repeat purchases from our users,” he adds.
Now, having raised over S$3 million, Livingmenu has grown to deliver over 20,000 meals a month in Singapore on the weekdays alone.
It also saw a year-on-year gross merchandise volume (GMV) growth of 700 per cent — and this figure is set to increase as more begin to crave for local food just hours away from them.
Livingmenu strives to maintain a competitive edge, and is planning to launch a new service within the next two months to capture the B2B and weekend demands.
“Our long-term mission is to help the best hawkers, chefs and food entrepreneurs succeed, and to create an ecosystem that helps sustain the local food culture, not just in Singapore, but the whole of Southeast Asia and beyond.”
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