Singapore sees highest second quarter layoffs since 2009
Employment growth in Singapore remained low in the first half of 2016 while unemployment and redundancies have risen, says the Ministry of Manpower (MOM), which expects total workforce growth ahead to remain moderated given demographic trends affecting the local workforce.
“Barring unexpected shocks in the external economy, MOM expects labour demand to remain modest in 2016,” says the ministry in a Thursday statement.
“In line with the weaker global growth outlook, hiring is expected to be cautious in the manufacturing sector, as well as other externally-oriented services sectors such as financial & insurance services and wholesale trade.”
Based on its review of the first half of 2016, additional observations made by the ministry include:
Slowdown in local employment growth rates
Local employment remained flat in the first half of 2016 and rose 0.4% in 2Q, which was significantly lower than the growth of about 4% in 2Q13-14. MOM says that structurally, the decline in local employment growth is due to smaller cohorts of younger locals entering the workforce, coupled with the retiring of more workers from the ‘baby boomer’ generation.
Another factor is cyclical weakness in the economy resulting from subdued global economic conditions, which has been affected local employment growth since 2015. The severity of these cyclical effects vary across industries, resulting in overall flattish figures as local employment growth in certain sectors were offset by declines in others.
Foreigners step in to fill lower-paying jobs
While the unemployment rate rose among residents to 3% in June 2016 from 2.7% the previous quarter, MOM notes that foreign employment growth continued at a “moderate pace” for the first half of the year. This is especially so among Work Permit Holders (WPH) in the food and beverage (F&B) services as well as administrative & support services sectors, with a significant number being employed as cleaners, security guards and kitchen assistants.
The trend corresponds with the net shift in local workers away from lower-paying jobs, as the bulk of retiring workers had a lower education profile compared to younger cohorts entering the workforce, says the ministry.
Service sector biggest driver of employment growth
Services in Singapore accounted for the most of employment growth in 1H16 thanks to gains in the community, social and personal services as well as transportation & storage sectors – which offset the decline in the wholesale & retail trade sector on the back of sluggish overall retail sales. Yet, productivity fell by 0.6% in 1H.
Conversely, manufacturing was the hardest hit sector with employment falling by 5,300, particularly with the decline in the petroleum, chemical & pharmaceutical products, and transport equipment clusters. The segment’s productivity however rose by 4%, supported by the electronics and biomedical manufacturing clusters.
More lay-offs, job vacancies trend lower
Redundancies in Singapore continued its upward trend since 2010, with 4,800 workers having been made redundant in the second quarter of 2016 compared to 4,710 in the previous quarter – marking the highest second quarter of redundancies since 2009.
Job vacancies, too, continued to fall for the sixth consecutive quarter to 49,400 in 2Q from 50,000 in the 1Q16, with fewer residents made redundant in the previous quarter having re-entered employment by 2Q. Together with an increase in jobseekers, the seasonally-adjusted ratio of job vacancies to unemployed individuals declined to the lowest since March 2010 at 0.93.
“As the local workforce continues to shift to higher quality jobs due to better education and skills upgrading, businesses will need to press on with job re-design and restructuring to become more manpower-lean, as the government continues to regulate foreign manpower inflow at a moderated pace,” MOM concludes. According to the ministry, Singapore’s government intends to continue stepping up efforts with tripartite partners to transform the country’s industries, create more jobs of better quality, and help displaced workers to seize new job opportunities through various career and employment support programmes under SkillsFuture and Adapt and Grow initiatives.
This article first appeared in The Edge Singapore Market Report.