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UNEMPLOYMENT in Singapore stayed low in 2014 despite the fact that more workers were laid off in the fourth quarter amid ongoing business restructuring.
Releasing new data on the country's labour market on Friday, the Ministry of Manpower (MOM) said that the unemployment rate in 2014 was 2 per cent overall, and 2.9 per cent for Singaporeans.
This is largely the same as the previous year's figures, which were 1.9 per cent and 2.9 per cent respectively.
The number of people who were laid off went up in the fourth quarter. Some 3,910 workers were made redundant in the final three months of 2014, up from 3,500 workers in the previous quarter and 3,660 in Q4 2013.
Cumulatively, more workers were laid off in 2014 (12,930) compared to 2013 (11,560), according to the report produced by the ministry's Manpower Research and Statistics Department.
After taking into account the size of the workforce, the incidence of redundancy rose from 5.8 workers for every 1,000 employees to 6.3 workers per thousand in 2014.
The increase in layoffs was mainly due to services (from 5,430 to 7,260) and construction (from 1,120 to 1,690), which more than offset the decline in layoffs in manufacturing (from 5,000 to 3,970), MOM said.
The report added that the labour market in Singapore was expected to stay tight in 2015 amid lower unemployment and an increase in job vacancies.
"Labour demand will remain high this year, with the services sector expected to be a major contributor to employment growth. With labour supply remaining tight, there is likely to be upward pressure on wages in labour-intensive sectors such as construction, retail, and food services," MOM said.
Foreign employment growth, excluding foreign domestic workers (FDWs), moderated for the third consecutive year to 26,000, or 2.4 per cent, in 2014. This is down from 48,400, or 4.6 per cent, a year earlier.
MOM attributed the continued decline to a number of factors such as the government's ongoing measures to tighten foreign manpower in Singapore.
Even with this moderation, total employment in 2014 remained strong, expanding by 122,100 (excluding FDWs), or 3.7 per cent. This was slightly lower than the increase of 131,300 (4.2 per cent) in 2013.
Local employment, meanwhile, registered its largest gains in over a decade, growing by 96,000 (4.4 per cent) in 2014, higher than the 82,900 (4 per cent) in 2013.
While this is much higher than the average of 50,900 per year recorded from 2010-2012, MOM cautioned that the growth was likely to taper significantly in the coming years to an average of 20,000 towards 2020.
The report cited various reasons for this. First, the demographic effect will fade as the growth in the local working-age population starts to stagnate. The net entry of younger locals of working age will fall, and successive cohorts which enter the workforce will shrink in size as well.
There will also be more people from the "baby boomer" cohorts who will exit the working-age population. In 2020, for every one local who exits, 1.1 locals are expected to enter, down from 1.6 in 2014.
The report added that further improvement in the Labour Force Participation Rate (LFPR) is likely to be "muted".
Singapore's 80.2 per cent LFPR for residents aged 20-64 in 2014 is higher than that of the OECD average and of other major economies such as the United States (76.3 per cent).
"Singapore's LFPR for specific groups will continue to improve, with the labour market remaining tight and improvements to the educational and skills profile of the population, especially for older workers and women," MOM said.
"However, it is likely that any further LFPR gains will be realised at a slower pace over the next few years, and the pool of potential local entrants into the labour force will be smaller."
Given Singapore's physical and social constraints, foreign manpower policies will remain tight to maintain growth at a sustainable pace, the ministry added.
With employers finding it harder and more expensive to hire workers, both local and foreign, they need to shift towards more skills- and capital-intensive ways to grow. Companies will need to focus on the quality of the workforce as a key source of growth, productivity and competitiveness.
Said MOM: "This will require not just automating tasks and improving processes, but also making significant investments in the skills and development of their employees. The window to make such changes is narrowing, and it is crucial for businesses to adjust in order to survive and thrive in the new normal of slower workforce growth."