With Singapore’s economy contracting by a historic 13.2% in 2Q2020 ended June, it is no surprise that the labour market has been under the weather.
Total employment excluding foreign domestic workers (FDWs) plunged by 103,500 in June, making this the metric’s sharpest decline on record. The data was revealed in the Ministry of Manpower’s (MOM) Labour Market Report released on September 14.
The greatest falls in employment were seen across sectors such as food and beverage services (-22,900), construction (-13,600), retail trade (-8,000), arts, entertainment and recreation (-7,600), and administrative and support services (-7,600), which were among the hardest hit by the circuit breaker measures.
A weak external demand also took a toll on employment in the wholesale trade (-7,900) and manufacturing (-8,900) sectors.
Overall, total employment declined by 129,100 in the first six months of the year,
Breaking down the numbers, MOM indicates that local employment dipped 2.7% or 62,700 while that for foreigners was down 5.7% or 66,400.
Cutbacks in the employment of foreigners were widespread across sectors, with a significant number among holders of Work Permit and Other Work Passes (-51,100), S Passes (-11,200) and Employment Passes (-4,100).
Meanwhile, Singapore’s seasonally-adjusted unemployment rate edged up by 0.4 percentage points in June, in line with expectations of a softer labour market outlook.
The city-state’s overall unemployment rate rose to 2.8% in June, deteriorating from the 2.4% registered in March.
Unemployment among both residents and citizens rose, with resident joblessness hitting 3.8% in June, from 3.3% in March. This follows an “increase in the number of short-term unemployed, as the seasonally adjusted resident long-term unemployment rate dipped to 0.8% in June, from 0.9% in March,” MOM highlights.
Citizen joblessness meanwhile, inched up to 4% in June, from 3.5% in March.
Aside from this, retrenchments in 2Q2020 came in at 8,130, more than double the 3,220 layoffs seen in the previous quarter. This is higher than the 5,510 layoffs seen during the height of the SARS pandemic in 2Q2003, but lower than that in other recessionary peaks, MOM notes.
Just over half of locals retrenched were PMETs (professionals, managers, executives and technicians), with the incidence of retrenchment rising sharply for non-PMETs given their greater participation in industries severely affected by the pandemic.
Overall, layoffs in the first half of the year hit 11,350, higher than the 9,920 estimate released by MOM previously.
Albeit higher than the 10,120 layoffs seen during the height of the 2003 SARS pandemic in 1H2003, MOM notes that the latest showing is “lower than other past recessionary peaks”.
It adds that the an even worse number was prevented by measures such as the placement of some 81,720 employees on short work-week or temporary layoffs during the circuit breaker measures imposed during 2Q2020.
Even so, the six-month re-entry rate among retrenched residents plummeted to an all-time low of 58% in 2Q2020, MOM says.
Dwindling job vacancies
A cause for concern comes from the seasonally-adjusted ratio of job vacancies to unemployed persons. The metric tumbled to 0.57 in June – its lowest in a decade – from the 0.71 it was at in March.
A number less than 1, implies that the number of available jobs is insufficient to serve all the unemployed, even if they undergo retraining.
In this instance, it means there are only five placements for every 10 persons unemployed in Singapore.
In absolute terms, there were 42,400 job vacancies in June, compared to 46,300 in March.
For now, there is no visibility on whether this number will improve in the months ahead, given the uncertainties facing the global economy. As such, MOM says “softness in the labour market is likely to persist with continued weakness in hiring and pressure on companies to retrench”.
Even so, it flags several bright spots such as in the electronics and precision engineering clusters which are slated to expand from the global demand for semiconductors and semiconductor equipment.
The manufacturing cluster is similarly looking to grow from the increased production of pharmaceuticals and biological products.
Things are also looking up for the information and communications sector thanks to the strong demand for digital solutions, as well as finance and insurance which have been expanding more vigorously into e-payment processing services.
As for the other sectors, help is on its way through the $1 billion Jobs Growth Incentive scheme supporting businesses’ expansion and hiring plans. Under this, employers will receive salary support, especially for mature hires, to increase their local workforce between September and February 2021.
Also available are the 100,000 job opportunities announced in the Fortitude Budget. These opportunities will cover three aspects: 40,000 new jobs, 25,000 traineeships and 30,000 paid skills training placements.
Selena Ling who heads OCBC Bank’s treasury and strategy division says, “in the near-term the bulk of the heavy lifting still falls squarely on the government’s shoulders”.
Drawing reference to the recent retrenchments such as at Singapore Airlines, Ling says companies – especially those in the aviation and tourism sectors – are starting to the bite the bullet and recognise that it may take their industries months or even years to recover.
“While proactive policies to support the labour market through substantial salary support for employers have helped, the fiscal support is likely finite due to the heavy financial cost,” cautions Ling.
