For one, market watchers believe that the impact of the economy on retrenchments takes time to be seen. What this means is that the impact of reduced levels of economic activity during the two-month circuit breaker in 2Q2020 will only show up in the job market’s performance in the second half of the year.
The Covid-19 pandemic has done enough damage in the past six months to wipe out Singapore’s economic gains since 2016. The government estimates the economy to shrink between 5% and 7% this year, a lowered forecast of –4 to –7% given earlier.
This gloomy prognosis spells bad news for a job market that is already under stress. Advance estimates from the Ministry of Manpower (MOM) showed that the unemployment rate climbed from 2.4% in March to 2.9% in June. MOM’s job situation report released on Aug 11 cautions that the “softness in the labour market is likely to persist, with weakness in hiring and pressure on companies to retrench”.
