2016 jobs market clocks lowest growth since 2003 (Amended)

Singapore

SEASONAL hirings for the year-end festivities helped to grow jobs in the final quarter of 2016, but by not much, as layoffs and the jobless rate rose.

Total employment grew by an estimated 1,900 in the quarter, after a drop of 2,700 in the previous quarter. The growth, however, was lower than a year ago, when employment was up 16,100.

Higher job creation in the services sector more than offset the sharper drops in manufacturing and construction, going by preliminary figures released by the Ministry of Manpower (MOM) on Thursday.

The manufacturing sector recorded the ninth straight quarter of job loss - the worst since the first quarter of 2015. The construction suffered the sharpest net job losses since the second quarter of 2002.

The labour market continued to soften in the final quarter. MOM's advance report for October to December 2016 and the full year said total employment is estimated to have increased by 16,400 (8,200 excluding foreign domestic maids), or just 0.4 per cent in 2016; this was roughly half the numbers in 2015 and the lowest growth since 2003, when employment fell by 12,900.

MOM said: "The moderation in total employment in 2016 took place amid slower growth in the Singapore economy, a slowdown in local labour force growth and continued tightening of the supply of foreign workforce."

Local employment rose by about 10,700 (0.5 per cent), largely in the services sector. Foreign employment slipped by 2,500 (-0.2 per cent), the first drop since 2009. The cut-back was mainly in the construction and marine sectors.

Surprisingly, the overall unemployment rate edged up from a seasonally-adjusted 2.1 per cent in September to 2.2 per cent in December. Private-sector economists had expected it to stay at 2.1 per cent, said Citigroup's Kit Wei Zheng.

For the quarter, the jobless rate for residents (Singaporeans and Permanent Residents) jumped from 2.9 per cent to 3.2 per cent - the highest since the first quarter of 2010.

"This occurred even as employment grew, as more people entered the labour force to look for work," MOM noted.

For the full year, the unemployment rate rose from 2015's 1.9 per cent to 2016's 2.1 per cent - the highest since 2010. Among residents, the unemployment rate for the year rose from 2.8 to 3.0 per cent.

Layoffs jumped from 4,220 in the third quarter to 5,300 in the final quarter, nearly matching the number of a year ago (5,370). Services continued to contribute most to total redundancies (53 per cent).

For the full year, redundancies, which have been rising steadily since 2010, hit 19,000 - mainly due to economic restructuring and a slower economy, said MOM.

The layoffs went up across all broad sectors, with the number being the highest since 2009 (23,430).

Responding to the latest labour report, NTUC Assistant Secretary-General Patrick Tay said: "The increase in resident unemployment to 3.2 per cent in December is a concern, even though employment rose in the fourth quarter."

Noting the rise in layoffs, he added: "While redundancy may be inevitable in certain circumstances, we urge companies to carry it out in a fair, responsible and sensitive way."

The softer labour market also slowed income gains. Nominal median monthly income (including employer CPF contributions) of full-time employed Singaporeans rose 0.7 per cent year-on-year to S$3,823 in June 2016, or 1.3 per cent in real terms. Nominal income grew 6.5 per cent and 7.0 per cent in real terms in 2015.

Selena Ling, OCBC Bank's head of Treasury Research & Strategy, expects the labour market to continue to soften because of "sluggish domestic business conditions, coupled with an uncertain external business climate due to (US President Donald) Trump's policies of uncertainties and the continued slowdown in China".

"This could drag the overall unemployment rate higher to around 2.5 per cent this year," she predicted.

Foo See Yang, recruitment firm Kelly Services Singapore's managing director and country head, said the labour market can be expected to stay soft in the first quarter, and "may only see modest improvement" in the next quarter.