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MOM reports more jobs, higher salaries for locals

But Q2 productivity suffers retreat; foreign employment growth slows to just 3,800

The tight labour market in Singapore has resulted in more jobs and higher salaries for locals, while the growth in foreign worker employment fell to its slowest quarterly pace since 2009 - PHOTO: SPH

[SINGAPORE] The tight labour market in Singapore has resulted in more jobs and higher salaries for locals, while the growth in foreign worker employment fell to its slowest quarterly pace since 2009.

But productivity gains saw a reversal in the second quarter of 2014 with negative growth of 1.3 per cent, bringing to an end a run of three straight quarters of positive growth.

Local employment growth remained strong at 41,000 (4.2 per cent year-on-year growth in June), with the services sector accounting for nearly 90 per cent of the jobs created, said the Manpower Ministry (MOM) on Monday.

Last year, the real median gross monthly income for full-time citizen workers went up by 4.6 per cent, the ministry said as it released details of Singapore's labour market situation for the first half of 2014.

The seasonally adjusted citizen unemployment rate was stable at 2.9 per cent in June, while the resident long-term unemployment rate remained among the lowest in the world at 0.6 per cent.

Total employment grew by 27,700 in the second quarter of 2014, moderating from the growth of 33,700 in the same quarter last year, but comparable to the 28,300 in the first quarter of the year. This brought total employment to 3.55 million in June 2014, 3.8 per cent higher than a year ago.

The latest numbers are indicative of the government's ongoing push to progressively raise the quality of the foreign workforce and reduce the reliance on foreign labour.

This, said MOM, is in line with national efforts to achieve quality economic growth driven by sustained productivity improvements.

In a statement, the ministry said that it expects the strong hiring of Singaporean workers to continue for the rest of this year.

This is due to a confluence of foreign workforce constraints, higher wages, and employers adopting flexible work arrangements to attract more women and older workers into the labour force.

MOM added that wages are expected to continue moving up, but these increases could only be sustained over the long term by improving productivity.

As for foreign workers, MOM said that their total employment growth slowed to 11,200 for the first six months of 2014, which was less than half compared to the same period in 2013.

What's also notable is the fact that foreign employment growth in the second quarter of 2014 came in at just 3,800.

This is the lowest quarterly expansion since the third quarter of 2009 during the global financial crisis, when only 700 foreign worker jobs were created.

OCBC economist Selena Ling said that foreign employment growth was at a low as firms continue to adjust to manpower policy constraints, although the transition process for selected labour-intensive services and construction sectors was "probably more accentuated".

"The consolidation process for firms will likely continue in the interim as the productivity performance of these few sectors are still falling short of targets," she said.

The productivity push, meanwhile, hit a roadblock in Q22014 with negative growth of 1.3 per cent. This ended a period of three straight quarters of positive gains.

"Overall productivity growth is expected to remain uneven," said MOM in its outlook for the rest of the year.

Michael Smith, the country director in Singapore for employment services provider Randstad, said that, in order to maintain productivity, employers should continue to offer workforce-relevant upskilling and career growth opportunities to help fill the gaps for skills that are in demand.

On the whole, MOM said that the current manpower-lean environment in Singapore will continue to be a feature of the economy in the coming years.

"As the economy restructures, some consolidation and exit of less-productive businesses are expected. MOM and the Workforce Development Agency stand ready to help displaced local workers re-skill and upgrade so that they are positioned to take on the new jobs created."