SINGAPORE (July 1): The labour market in Singapore has typically been tight. Over the last four decades, the city state had an average unemployment rate of 2.43%. It did reach an all-time high of 6% in early 1986 as Singapore faced its first recession post-independence. Then, the economy rebounded, and as the government restructured the economy, the jobless rate fell to a record low of 1.4% in 1990.
For 2018, the full-time employment rate was 75.4%, putting Singapore fourth among the Organisation for Economic Co-operation and Development countries.
Yet, as we relate in this week’s report, it seems that young Singapore university graduates are having trouble finding employment that either match their expectations or are relevant to their freshly obtained degree. Among working-age individuals who are younger than 30, 5.2% are unemployed. The unemployment figures for older people are 2.5% and below. The overall unemployment rate in 1Q2019 was 2.8%.
Our reporter talked to two young and educated women who managed to secure jobs, but they fell short of their expectations. One works as a tuition teacher and the other, a retail assistant. They had graduated from the universities here with degrees in life sciences and economics and expected to be gainfully employed in the thriving financial and life sciences sectors, but failed to find jobs.
A common refrain among those seeking to explain this situation is that jobseekers, particularly fresh entrants into the workforce, are too choosy about employment opportunities or have unrealistic expectations of wages and the types of roles they would assume.
It may be so, and apparently is a consequence of the universities’ own bragging about what their graduates earn, according to one observer. In one headline-grabbing instance in 2007, Singapore Management University said not only did all its graduates find jobs within six months of finishing university, one even landed a $12,000 per month job in investment banking — four times the norm.
Yet, the failure of fresh graduates to get a job related to their field of study raises serious questions on the relevance of their chosen, hard-earned qualifications to the economy. Furthermore, the local universities they graduated from are highly ranked academically among colleges worldwide — NUS is 33rd on a graduate employability list, behind Imperial College London and ahead of Duke University. Topping this list published by QS, a global career and education company, is Massachusetts Institute of Technology, followed by Stanford University.
This mismatch of skills and jobs also raises the broader question of whether there is a structural problem in the economy. In the case of Singapore, what is clear is that its ageing population is presenting a myriad of challenges to the economy and policymakers. We now have a workforce that is staying in place for longer. As the government gradually increases the retirement age and as the cost of living rises, people are prolonging their working life. According to the Ministry of Manpower, the employment rate for older residents aged 65 and above continues to rise, from 25.8% in June 2017 to 26.8% in June 2018.
Indeed, there have been various government initiatives to help older workers keep up with the fast pace of changes in the workplace, largely due to advancements in technology that are disrupting traditional processes. But that may not necessarily be a good thing when viewed in the context of young people being unable to find full-time employment, as an older workforce in place for a longer duration also prevents the young graduates from taking over.
To be sure, Singapore’s labour market has been carefully calibrated to match the needs of the economy since the early days of independence, when it found itself with plenty of young people but little to no industry. Goh Keng Swee, Singapore’s first minister of finance, who is widely acknowledged as the “architect” of the economy, kick-started the development of Jurong with labour-intensive jobs in making garments, toys and wigs so that the young could be kept off the streets and made economically productive.
In the late 1980s, as the government sought to alleviate high unemployment and return the economy to growth, it implemented various structural reforms. These included moving manufacturing up the value chain, liberalising sectors such as telecommunications and utilities, promoting innovation and entrepreneurship and ensuring wages were manageable for employers, specifically, by cutting CPF contribution rates. As the economy grew and Singaporeans moved up the value chain, so to speak, workers from other countries came in, for both menial as well as managerial jobs.
The adage was that Singapore has no resources except for its workforce. Yet, that workforce has been coming under immense pressure to transform, with workers repeatedly urged to “stay relevant” by retraining for new roles or upgrading their skills.
Now, the challenge seems to be finding suitable jobs even for newly trained locals. It may be that more young people today are not keen on a corporate job and running the rat race. Yet, not everyone is suited to be an entrepreneur or has an innovative breakthrough to bring to market. Indeed, the problem of youth unemployment here could be even more serious, masked by the gig economy.
Whatever the case, lack of gainful employment among the young, the future of every society, has serious and far-reaching consequences. Research has shown that young people who are unemployed experience a negative impact on their well-being. A slower start in life would also result in lower lifetime earnings and overall reduced opportunities in life.
The problem of young and educated residents having difficulty in finding full-time employment also affects the state. If they are unemployed, they will not be contributing taxes and they may not be able to support their elders, who will then have to depend on the state for support.
The situation in Singapore is not anywhere as dire as that in parts of Europe, for instance. But it nonetheless needs to be addressed. That there is even an acronym — NEET (not in education, employment or training) — for this group of young people shows how serious the problem is.
