SINGAPORE, Oct 24 — New labour market data out today showed Singapore’s strongest employment growth in almost five years, but also rising retrenchments and the highest unemployment rate in nearly a decade.
Addressing the apparent contradiction in a Facebook post, Manpower Minister Josephine Teo said today that the data suggest that mismatches in the labour market are widening.
“It could be jobseekers not having the skills to access available jobs, or jobs being insufficiently attractive. Closing the gaps require both jobseekers and employers to be more open and flexible,” she said.
The preliminary third-quarter data, released by the Ministry of Manpower, showed that the number of people employed, excluding foreign domestic workers, shot up to its highest quarterly increase since almost five years ago.
Employment growth
Total employment for the third quarter of 2019 grew by 22,400, excluding foreign domestic workers.
Sectors that contributed to employment growth:
- 16,100 new jobs in services
- 5,300 new jobs in construction, the highest level since the first quarter of 2014
- 1,200 new jobs in manufacturing, after three quarters of decline
Unemployment and retrenchment
Despite strong employment growth, the report said that the labour market indicators painted a mixed picture as unemployment and retrenchments rose over the third quarter.
Unemployment data:
- Overall unemployment rate went up from 2.2 to 2.3 per cent — the highest since December 2009
- Overall unemployment numbers are 85,500 — the highest since September 2009
Retrenchment data:
- 2,900 workers retrenched in the third quarter, up from 2,320 in the second quarter
- Most retrenched worked in the services sector (66 per cent), followed by manufacturing (21 per cent) and construction (14 per cent)
Why is this so?
The report referred to the possible mismatch in the labour market, given that the increase in unemployment rates occurred when there were still vacancies available.
In her Facebook post, Teo added: “Jobseekers naturally prefer to return to their past occupations or industries. The better opportunities may however lie elsewhere. Some training and adjustment may be needed.”
How does the job picture correspond with economic data?
The third quarter’s strong employment growth may seem somewhat at odds with the authorities projecting Singapore’s economy to grow somewhere between zero and one per cent for the whole of 2019, a very sluggish rate of expansion.
But economists say that’s not true.
Barnabas Gan, an economist from United Overseas Bank (UOB), said that the data reflects what Singapore’s central bank chief Ravi Menon told Bloomberg today that “the current cycle should be bottoming out towards the end of the year and into next year”.
Services
Employment growth in services corresponds with the way that the services sector is still holding up, growing 0.9 per cent year-on-year, based on third quarter advanced estimates from the Ministry of Trade and Industry (MTI).
Gan said: “It’s clear evidence to show that support for overall growth in Singapore is hinging on services… Slowdown appears concentrated in the manufacturing space”.
Services covers everything from banking and finance, to tourism and the food and beverage sector.
Construction
Jobs growth in the construction sector corresponds with more infrastructure projects, said Irvin Seah, economist with DBS bank.
Manufacturing
While manufacturing exports are suffering due to the trade war between the United States and China, Song Seng Wun, an economist from CIMB said that companies are still investing in new technologies.
Seah said jobs growth in manufacturing corresponds with how the decline in the manufacturing sector has moderated in MTI’s third quarter advanced estimates.
“Don’t get too excited”
Despite the strong employment growth this quarter, economists say it’s nothing to shout about.
Though the labour market is still resilient, Gan said that the Monetary Authority of Singapore’s (MAS’) rhetoric on the labour market has become less optimistic.
In a joint statement on September’s inflation yesterday, MAS and MTI said that the labour market is “softening slightly”. This is different from their statement on August inflation, which stated that the labour market has “largely held up”.
Pointing out that today’s labour market report is just a preliminary report, Seah said not to “get too overly excited with this number”.
“The devil lies in the details. 22,400 new jobs, how they are being distributed between Singaporeans and foreign workers? … We will get more insights when the final report is out,” he said. — TODAY
