Increase in Unemployment and Redundancies in Singapore in Q4 2016

February 1, 20178:41 am1102 views

Amid restructuring and a slower economy, local employment grew modestly in 2016, while foreign employment contracted. Unemployment increased for residents and citizens in Singapore. Redundancies were also higher. Median income for citizens continued to grow over the last five years, although growth slowed in 2016.

These are the key findings from the “Labour Market Advance Release 2016” report released by the Manpower Research and Statistics Department, Ministry of Manpower.

Unemployment and redundancies rose, while employment grew in the fourth quarter

According to preliminary estimates, the seasonally adjusted unemployment rate rose from 2.1 percent in September 2016 to 2.2 percent in December 2016, residents (2.9% to 3.2%) and citizens (3.0% to 3.5%). This occurred even as employment grew as more people entered the labour force to look for work.

The annual average unemployment rate rose to its highest in 2016, since 2010 for overall (1.9% in 2015 to 2.1% in 2016), residents (2.8% to 3.0%) and citizens (2.9% to 3.1%). This increase was broad based across most age and education groups, with residents aged 30 to 39 and 50 and over, as well as those with secondary and degree qualifications particularly affected.

Local employment increased by an estimated 10,700 (or 0.5%) in 2016, rebounding from the flat growth in 2015. Local employment growth occurred in many services sectors, including community, social and personal services, professional services and transportation and storage.

On the other hand, foreign employment (excluding FDW) contracted in 2016 (-2,500 or -0.2%), the first time since 2009. Declines were mainly in construction and marine.

On the whole, total employment is estimated to have increased by 16,400 or 0.4% (8,200 excluding FDW) in 2016, the lowest growth since 2003. The moderation in total employment took place amid slower growth in the Singapore economy, slowdown in local labour force growth, and continued tightening of foreign workers policy.

Redundancies also increased in the fourth quarter of 2016, with 5,300 workers being laid off. This is higher than Q3 2016 with 4,220 workers and is similar to a year ago. For the whole of 2016, redundancies rose to 19,000, mainly due to restructuring and a slower economy. Redundancies have trended up since 2010, but remained lower than the recessionary high in 2009.

There was sustained income growth at the median and 20th percentile over the last five years. The median income (including employer CPF contributions) of full-time employed citizens rose by 25% (4.5% p.a.) in nominal terms from 2011 to 2016, or 16% (3.1% p.a.), after adjusting for inflation. This was unlike in the earlier five years (2006 to 2011) when it grew at a slower rate than the median.

See: Fewer Companies in Singapore Plan to Increase Headcount in 2017

Due to the slow economic growth and unpredictable external environment in 2016, Foo See Yang, Managing Director and Country Head of Kelly Services Singapore anticipates that, the labour market in Q1 2017 will likely remain soft, and may only see modest improvement in Q2 2017, after bonus payouts.

See Yang believes, “The uncertain economic environment would only increase the importance of upskilling for both employed and unemployed workers. With the rise of technology and automation, employees must continue to adapt to the changing work environment and improve skills to ensure they remain productive and ahead of the curve.”

Kelly Services observes that companies will remain conservative in their hiring approaches in order to adapt to changing staffing needs. As a result, you will see continued rise in contract and temporary positions, with an increasing preference for flexibility in the workforce also contributing to this trend.

An advantage of contract work is that it enables both employers and employees to assess cultural fit and job suitability prior to making a long-term job commitment.

Yang comments: “In 2017, global factors will continue to impact the local labour market, especially in sectors such as banking and finance, manufacturing and services. 2017 will also see an increase in positions across sectors such as IT, government and engineering.”

With the focus of Budget 2017 on economic growth and families, it remains critical for companies to upskill their workforce and update policies to allow for more flexibility in order to attract and retain talent. This becomes even more important in the long-term as Singapore faces an ageing society, and mature workers become a larger part of the core workforce mix.

Employees should also look to upgrade their skills and learn new skills through initiatives such as SkillsFuture, in order to broaden their opportunities and maintain a competitive edge.

Also read: MAS flags risk of ’emerging slack’ in Singapore labour market

Image credit: thanhniennews.com

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