SINGAPORE, Sept 14 — In light of economic headwinds, hiring sentiments continued to be cautious for the second quarter of this year. The number of job vacancies offered on the market continued to decline from the previous quarter, as the resident unemployment rate inched upwards, based on the Ministry of Manpower’s (MOM) latest labour market report released on Thursday.
For the first time since December 2017, there were fewer job vacancies than unemployed persons. In June, there were 93 job openings per 100 job seekers. In comparison, there were 108 job vacancies per 100 job seekers in March.
Nevertheless, MOM noted that the “retrenchments remained low and the resident long-term unemployment rate held steady”.
The resident unemployment rate increased marginally from 3 per cent in March to 3.1 per cent in June. The seasonally-adjusted resident long-term unemployment rate — referring to the number of people unemployed for at least 25 weeks — remained unchanged at 0.7 per cent.
Here are the key findings from the report:
Fewer job vacancies
Demand for labour continued to ease for the second consecutive quarter, with the number of job openings dropping from 57,100 in March to 47,700 in June.
The seasonally-adjusted ratio of job vacancies to unemployed persons dipped from 1.08 in March to 0.94 in June — similar to the ratio in December 2017.
The bulk of job vacancies were for PMETs (professionals, managers, executives and technicians). As of June, about six in 10 of job openings were PMET positions. The remaining vacancies were for production and related workers, and clerical, sales and service workers.
What economists say
Economists TODAY spoke to said that the cautious hiring approach taken by employers is largely due to global headwinds.
Selena Ling, head of treasury research and strategy at OCBC Bank, cited the trade tensions between the United States and China, China’s slowdown and the risk of a no-deal Brexit.
“Until we see signs of a growth pickup and the resolution of some of these uncertainties, the job vacancies may remain somewhat muted,” she said.
DBS senior economist Irvin Seah noted that the main gauge of the health of the labour market is the ratio of job vacancies to unemployed persons.
“It has remained above one for several quarters. Now it’s below one — which essentially means there are fewer job vacancies than unemployed persons… It does suggest that the labour market is really turning south,” he added.
Maybank Kim Eng’s economist Chua Hak Bin said he expects employment growth to “fall to near zero in the third quarter” as recent manpower surveys point to more muted hiring.
Total employment growing
- Driven primarily by growth in the services sector, total employment continued to grow by 6,200 in the second quarter of this year, with the figure roughly similar to the same quarter last year. This figure excludes foreign domestic workers.
- MOM noted that the pace of growth has slowed over the past three quarters.
- While the services sector formed the bulk of employment growth at 5,400, excluding foreign domestic workers, it was also the sector’s lowest since the third quarter of 2016.
Sectors that saw a rise in employment
- Professional services (2,100).
- Information and communications (2,000).
- Community, social and personal services (1,900). This was mostly in health and social services.
- Financial and insurance services (1,600).
The MOM said these increases were “partly offset by the decline in retail trade, where hiring intentions remain weak”.
- Continuing last quarter’s upward trend, the construction sector expanded employment by 2,700. The report said this reflected a demand “arising from public sector construction activities”.
- In contrast, the job market in manufacturing continued to contract for a third straight quarter as output in the sector fell.
What economists say
While external headwinds have resulted in “collateral damage” in external-oriented sectors such as manufacturing and wholesale trade, CIMB Private Banking economist Song Seng Wun said it is encouraging that it is not a broad-based scaling back by businesses on hiring.
He said there remains hiring demand for domestic-oriented sectors such as information and communications, financial and insurance services and the services sector in general
However, Seah pointed out that while the services sector formed the bulk of employment growth, it was largely due to more foreign workers being hired.
MOM said that in the first half of 2019, foreign employment in the services sector grew by 10,300. The sector saw foreign employment growing by 8,100 in the same period last year.
Said Seah: “This is why the Government had to tighten the foreign worker regulations in the services cluster earlier this year. That was a good move.”
Retrenchments fell
The number of workers laid off has continued to decline since the second quarter of last year.
MOM said the decline was “broad-based across most industries, in particular electronics”, though the reasons cited for laying off workers continued to be for restructuring and reorganisation purposes.
Number of workers retrenched:
- Second quarter 2019: 2,320
- First quarter 2019: 3,230
- Second quarter 2018: 3,030
Sectors most affected by retrenchments:
- Services (72 per cent)
- Wholesale trade (19 per cent)
- Financial services (17 per cent)
A reason cited by the report for the lower retrenchments was that more employees were placed on short work weeks or temporary layoffs.
- This number has edged up for the third consecutive quarter. It increased from 940 in the first quarter of this year to 970 in the second quarter.
- By occupation, three in five employees (60 per cent) affected were from production and related workers, while the remaining were split among PMETs (21 per cent) and clerical, sales and service workers (19 per cent).
What economists say
Ling said the lower number of retrenchments suggests that while employers are cautious, they are uncertain about whether the slowdown would be temporary and the external macro headwinds would fade over time.
“Given the structural constraints of an ageing population and the DRC (Dependency Ratio Ceiling) tightening for the services sector that will kick in from January 2020, (employers) may be reluctant to fire workers now,” she said.
On the resident unemployment rate of 3.1 per cent, Song said it was leaning towards the “high-side”. “At the worst, during the 2008 and 2009 recession, that was when both (the resident and citizen employment rate) were near to five per cent. It is crawling up,” he noted.
Labour market outlook
The Ministry of Trade and Industry (MTI) has downgraded the 2019 GDP growth forecast range for the Singapore economy to 0 to 1 per cent, from 1.5 to 2.5 per cent. Growth is expected to come in “at around the mid-point of the forecast range”, MTI said.
MOM noted that in the first half of this year, employment remained robust in sectors such as community, social and personal services, professional services, financial and insurance services, and information and communications. “Job opportunities in these sectors will continue to provide support to the labour market,” it said.
What economists say
Dr Chua: “How the job market will fare in the coming quarters will depend on the US-China trade negotiations. Retrenchments could rise if the trade war continues to escalate, and the manufacturing recession deepens.”
Seah: “I don’t see signs that things will improve in the near term. Workers will have to tighten their belts and be more prudent in their expenditure. It will be important for policymakers to stay vigilant and work closely with employers to mitigate risk of mass retrenchment, which is the last thing we hope to see.”
Ling: “With overall GDP (gross domestic product) growth expected near the midpoint of the 0 to 1 per cent year-on-year range for 2019, and market speculation of potential policy easing, any fallout in the domestic labour market should be somewhat limited in the near-term.” — TODAY
