Amid subdued global economic conditions, MOM expects redundancies to continue to rise in sectors facing weak external demand and those that are undergoing restructuring. Redundancies seem to have maintained an upward trend since 2010.
The rise in unemployment and redundancies reflects the subdued external economic environment, the continued restructuring of the economy, and structural slowing of local labour force growth.
4,800 workers were made redundant in Q2 2016, up slightly from 4,710 in Q1 2016, and the highest second quarter redundancies since 2009. Fewer residents (45%) made redundant in Q1 2016 re-entered employment by June 2016, a slight decline from 46% in the previous quarter and the lowest since June 2009.
Barring unexpected shocks in the external economy, MOM expects labour demand to remain modest in 2016. In line with the weaker global growth outlook, hiring is expected to be cautious in the manufacturing sector, as well as other externally-oriented service sectors such as financial & insurance services and wholesale trade.
While the sluggish global economic outlook could weigh on employment growth in the externally-oriented services sectors, employment growth in the domestically-oriented sectors is expected to remain firm, with a likely seasonal pickup in hiring during the year-end festive period.
Job vacancies fell for the sixth consecutive quarter to 49,400 in June 2016 (from 50,000 in March 2016). The decline was broad-based across many sectors and occupation groups. Coupled with the increase in unemployed people, the ratio of job vacancies to unemployed people fell to 93 openings per 100 seekers, compared to 103 in March.
The slower local employment growth since 2015 reflects both structural factors and cyclical effects. Structurally, growth of the local working-age population is slowing, due to smaller cohorts of younger locals entering the workforce, and more “baby boomers” retiring.
Apart from structural factors, local employment growth since 2015 has been further weighed down by cyclical weakness in the economy due to the subdued global economic conditions, with the impact varied across sectors.
Singapore sees local employment growth in sectors such as community, social & personal services and transportation & storage, thus resulting in flat local employment. For H1 2016, the country sees local employment decline in sectors such as manufacturing, which saw sluggish performance of the transport engineering cluster amidst sustained low oil prices; Retail Trade, on the back of sluggish retail sales (excluding motor vehicles); and Real Estate, amid the lacklustre property market.
Total employment (excluding Foreign Domestic Workers (FDW)) grew by 11,600 in H1 2016; reversing the decline in H1 2015, but significantly lower than the growth rate in the same period in 2013 and 2014.
Overall labour productivity (as measured by value-added per worker) rose by 0.8% in H1 2016 over the same period last year. This was an improvement from the 0.3% growth in H2 2015.
Quoting figures from the MOM’s half-yearly labour market report, Channel News Asia reported, “The overall unemployment rate rose from 1.9 per cent in March to 2.1 per cent in June. Unemployment rose further among residents aged 30 and above, and in particular, for those aged 50 and above, which saw unemployment rise for the fifth consecutive quarter. Those with higher qualifications were not spared, with unemployment rates among degree holders rising to their highest level since 2009.”
The manufacturing and construction sectors saw productivity growth of 4.0% and 1.5% respectively. Within the services sector, wholesale and retail trade experienced the highest productivity growth (3.3%) while business services (-2.7%), other services (-2.0%) and Information & Communications (-1.5%) sectors saw the sharpest declines in productivity.
Looking ahead, total workforce growth will remain moderated given the demographic trends affecting the local workforce. While cyclical factors may affect labour demand on a year-to-year basis, labour supply will be significantly lower on a secular basis compared to the earlier part of the decade.
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, with the Government continuing to regulate its foreign manpower inflow at a moderated pace.
The Government will continue to step up efforts with tripartite partners to transform industries, create more jobs of better quality, and help displaced workers to seize new job opportunities through various career and employment support programmes such as SkillsFuture and Adapt and Grow initiative. The latter was announced by Minister Lim Swee Say at the MOM Committee of Supply Debate 2016.
The Adapt and Grow initiative offers a package of enhanced employment support initiatives, including the expansion of Professional Conversion Programme (PCP) to support those switching careers, and enhancement of the Career Support Programme (CSP) to help displaced PMETs secure a quality job with employers.