14-9-2023 (SINGAPORE) In a surprising turn of events, the Ministry of Manpower (MOM) revealed that the number of employed Singapore citizens and permanent residents has decreased for the first time since the second quarter of 2020. According to MOM’s latest labour market update released on Thursday (Sep 14), resident employment contracted by 1,200 in the second quarter of 2023. This decline, however, occurred despite “robust increases” in sectors like community, social, and personal services, as well as financial and insurance services.
The dip in employment in the retail trade and food and beverage services sectors was primarily due to seasonal factors, offsetting the growth seen in other areas, according to MOM. Mr. Ang Boon Heng, Director of Manpower Research and Statistics at MOM, explained, “Usually in the second half of the year, close to September until December, and sometimes stretching a little bit into the Chinese New Year, we have all these year-end festivities as well as we have the Formula One race.” He further added that many individuals are hired temporarily for work related to these events, but this tapers off in the first half of the following year. “They tend to be students or part-time workers,” Mr. Ang elaborated.
MOM remains optimistic, stating that it does not expect the contraction in resident employment to persist. The upcoming recovery in tourism and year-end celebrations are expected to boost hiring, although it may not be as robust as in 2022.
Despite the drop in resident employment, total employment in Singapore grew for the seventh consecutive quarter, with 25,500 non-residents being hired. Almost half of these non-residents found employment in the construction sector, while other sectors continue to fill positions vacated by non-residents during the pandemic.
However, the increase in total employment during the second quarter was smaller compared to the first quarter, raising concerns about a weaker outlook. While the unemployment rate remained low in the second quarter, MOM anticipates a slight increase in the coming months. In July, the first month of the third quarter, the overall unemployment rate increased to 2%, up from 1.9% in June.
There are also signs of cooling labor demand, as job vacancies declined for the fifth consecutive quarter, reaching 87,900 in June. Consequently, the ratio of job vacancies to unemployed persons decreased to 1.94, down from 2.28 in March. MOM commented, “Given the weak external environment and economic growth for the rest of the year, labor demand could ease further and be uneven across industries.”
It’s worth noting that job vacancies reached a record high of 126,000 in March 2022. Mr. Ang from MOM explained, “At that time, basically everybody was saying that the market was overheating, overly tight. Businesses were saying that they don’t have enough; there was a worry about a shortage of manpower.” However, according to him, vacancies are now returning to a more reasonable level, which, before the pandemic, ranged between 50,000 and 60,000.
Furthermore, an MOM poll in June 2023 revealed that only 58.2% of firms had plans to hire in the next three months, down from 64.8% in March. Retrenchments declined in the second quarter after rising for three consecutive quarters, with reorganization or restructuring being the main reason cited. The information and communications sector drove the layoffs, but there remains a high likelihood of residents in this industry finding new jobs at 69.2%.
In summary, MOM has pointed out that growth prospects for Singapore’s labor market are uneven for the rest of the year. Outward-oriented sectors such as manufacturing and finance may face more challenges due to the external economic environment. However, aviation, tourism, and consumer-facing sectors are expected to benefit from the recovery in air travel.
