SINGAPORE'S labour market remained tight in the first quarter of 2015 as total employment shrank for the first time in five years.
In the latest figures released by the Manpower Ministry (MOM) on Monday, the overall unemployment rate fell to 1.8 per cent amid fewer redundancies, down slightly from 1.9 per cent three months ago.
The unemployment rate fell over the quarter for residents (Singaporeans and permanent residents) from 2.7 per cent to 2.5 per cent; for citizens, the fall was from 2.7 per cent to 2.6 per cent. But what was eye-catching about the MOM's quarterly report, produced by its manpower research and statistics department, was the fact that Singapore's employment shrank after five years of strong increases.
Credit Suisse economist Michael Wan remarked that this was the weakest employment growth seen in Singapore since the global financial crisis.
The number of people employed here fell by 6,100 in the first quarter of the year, MOM said. In March 2015, total employment reached 3,617,800, 2.7 per cent higher than a year ago.
The first-quarter contraction reflected "seasonal declines and sharper moderation" in employment growth in sectors with less favourable business conditions, the ministry said.
It reasoned that the contraction in employment may be reflective of how segments of the economy could be making the transition to becoming less reliant on manpower, and that further growth in the local labour force is expected to be limited, given the gains in labour force participation already achieved in recent years.
"Nevertheless, as the data is only representative of a single quarter, the employment numbers will need to be monitored over subsequent quarters to obtain a fuller picture," it added.
The first-quarter decline was led by manufacturing, with the workforce shrinking by 6,900 jobs amid weak output growth in marine and offshore engineering and the completion of chemicals maintenance projects.
Within the services sector, retail trade shrank by 4,800 jobs, and accommodation and food services, by 1,800 jobs.
MOM explained that these numbers were steeper than the usual seasonal declines in the first quarter after the end of the festive period as employers in these sectors "could be more cautious" about hiring amid moderate business conditions.
The declines, however, were partly offset by continued increases in services overall (4,300); the services sector includes community, social and personal services (which had a rise of 6,500 jobs) and administrative and support services (2,000 jobs).
Commenting on the employment contraction, job search and recruitment agency Randstad's country director in Singapore, Michael Smith, said that this was not a surprise due to falling oil prices and the government's focus on increasing productivity and transitioning to a more service- and quality-based economy.
There were 3,500 redundancies in the first quarter of 2015, compared with 3,910 in the fourth quarter of 2014. Putting the latest number into context, 1.7 workers were made redundant for every 1,000 employees, compared to 1.9 in the previous quarter and 1.6 a year ago.
Almost three-quarters of the residents made redundant in the first quarter - 72 per cent - were professionals, managers, executives and technicians (PMETs).
The next highest groups affected comprised production and transport operators, cleaners and labourers (16 per cent), and clerical, sales and service workers (12 per cent). Nearly two-thirds of the residents affected were workers aged 40 and above.
The rate of re-entry into employment within six months of being made redundant went down slightly in March after trending up over the last three quarters, the ministry said.
Based on CPF records, 57 per cent of the residents made redundant in the fourth quarter of last year secured employment by this March. This was down from the 59 per cent experienced by the previous cohort - laid off in the third quarter of 2014 - last December.
Vacancies held steady from the previous quarter and continued to outnumber job seekers. The seasonally-adjusted number of vacancies last quarter was 65,300, just a shade below the 65,500 in the previous quarter. Nearly half of the vacancies last quarter were for PMETs.
Randstad's Mr Smith noted that it was still an "employees' market" out there, with companies actively looking for the best talent across all skill levels. With this comes the need to invest time in implementing targeted talent attraction and retention strategies, he said.
Femke Hellemons, the country manager of Adecco Singapore, commented that the overall business confidence remained strong in Singapore.
"The fact that unemployment remains very low and that a high number of jobs are added each month, means that not only is this good from a business perspective - but also from a job-seeker's perspective too. We expect to see this trend continuing this year."
Meanwhile, Citigroup economist Kit Wei Zheng said he would keep an eye on the second-quarter job numbers, as a sustained decline in employment growth would eventually raise the unemployment rate and challenge the tight labour market assumptions of the Monetary Authority of Singapore (MAS).
"This reduces (the) likelihood of foreign worker inflows relaxation and (it) also raises the risk of an MAS easing if growth and inflation surprise negatively," he said.