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Labour market still tight in Q2, layoffs down
[SINGAPORE] The labour market remained tight in the second quarter of 2014 as unemployment rates held firm and the number of retrenchments came down.
According to preliminary estimates released by the Ministry of Manpower (MOM) yesterday, the overall seasonally adjusted unemployment rate stayed at 2 per cent in June.
This is a rate that economists and analysts say is largely in line with their market expectations, and has remained fairly constant for the last four quarters.
The seasonally adjusted unemployment rates for citizens remained at 3 per cent, while the resident unemployment rate improved slightly to 2.8 per cent, compared to 2.9 per cent in March.
The report, released by the ministry's Manpower Research and Statistics Department, also showed that job creation fell in the April-June period.
There were 22,000 jobs created in the second quarter, down 22 per cent from the previous quarter's 28,300. The total employment growth a year ago was 33,700.
Citigroup economist Kit Wei Zheng noted that the second-quarter drop in job creation contrasted with the average increase of 16.5 per cent quarter-on- quarter in the past two years.
This, he added, was a possible reflection of the cyclical slowdown in economic activity seen in the first half of 2014.
Femke Hellemons, country manager of human resource firm Adecco Singapore, felt that the slower job creation was due to the impact of sunset industries and sunset jobs, where certain jobs were made redundant or replaced by technology.
In all, the MOM report found that Singapore's total employment stood at 3.54 million in June, 3.6 per cent higher than a year ago.
Services continued to generate the majority of employment gains with 20,100 jobs, although this was lower than the 24,900 figure in the first quarter.
The news wasn't as good for the manufacturing sector, however. The industry shed some 2,600 workers - a sharp contrast from the growth of 2,300 workers a year ago - and also marks the largest quarterly fall in manufacturing jobs since the third quarter of 2009.
Growth in the construction sector, meanwhile, slowed to 4,300, almost half the 8,500 jobs created in June last year.
"With the exception of manufacturing, the low unemployment rate suggests that it may have been supply constraints that led to lower job creation," said Citigroup's Mr Kit.
As far as layoffs are concerned, MOM found that redundancies declined across all the major sectors.
About 2,300 workers were released in the second quarter, down from the 3,110 who were let go in the previous three months and the 3,080 laid off in June 2013.
Services formed the bulk of the retrenchments with 1,500 people affected, followed by manufacturing (500) and construction (300).
Kelvin Wong, chief technical strategist at City Index Asia, reckons that job creation in the coming months in Singapore should show signs of improvement.
This is provided the key economic data of Singapore's major trading partners - such as the United States employment payrolls and China manufacturing data - continue to stabilise and surprise on the upside.
Commenting on the tight labour market, Ms Hellemons of Adecco said that companies were facing challenges with the ongoing labour crunch here.
While the lower number of layoffs could point towards a continued optimistic economic outlook, she said that it could also mean that companies were being more cautious in releasing employees due to the limited talent pool in some areas.
While the tight labour market was proving to be a strain on companies in terms of hiring, one silver lining is that younger workers could benefit as a result.
"It does provide interesting opportunities for young job seekers who can observe trends in the job market and specifically skill and train for a career in areas where there may not be an abundance of available talent," said Ms Hellemons.
"We have seen this take place in the hospitality sector, which has created an additional number of job openings over the past few years," she added.
The full MOM report is available at http://stats.mom.gov.sg. The ministry said it would release more comprehensive labour market data for the second quarter on Sept 15.