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A more upbeat scenario for Singapore job market
THE job market for 2019 has turned out to be better than predicted - and many private-sector economists and recruiters are looking at stepped-up hiring in the year ahead, with real salary hikes for 2020 expected to surpass this year's.
At this time last year, economists and recruiters had forecast weaker job creation for 2019. The Ministry of Manpower's (MOM) latest data, however, shows otherwise.
Excluding foreign maids, employment growth in the first nine months of the year was "the highest in five years" - even as the Singapore economy continued to soften.
Yet the pessimists were not totally off when they predicted that job-seekers would have a harder time finding jobs in 2019.
Figures in MOM's labour market report for the third quarter of 2019 showed the unemployment rate and retrenchments creeping up, while job openings were still falling - indicating that hiring sentiment had been cautious.
Will the labour market continue to weaken in 2020? Private-sector economists and recruiters think not.
But the optimism is tempered with a note of caution.
Linda Teo, ManpowerGroup Singapore's country manager, said that that while employers are drawing up bigger hiring plans for the upcoming quarter, "they will adjust them in reaction to changing market conditions".
In a survey of 630 employers in Singapore, the US-based recruitment firm found 13 per cent of them ready to expand their payrolls in January-March 2020, while 5 per cent intend to cut them and 79 per cent anticipate no change.
This gives a "net employment outlook" of 9 per cent after seasonal adjustment, a moderate increase of five percentage points from the previous quarter.
Not surprisingly, the prognosis for pay is also fairly upbeat. Korn Ferry estimates real salary hikes of 3.6 per cent in 2020, up from 3 per cent in 2019, after accounting for inflation which is tipped to rise just 0.4 per cent in the next 12 months.
But the projected pay increase, higher than the regional (3.1 per cent) and global (2.8 per cent) average raise in real terms, is not attributed entirely to economic recovery.
"With the ongoing situation in Hong Kong and geo-political uncertainty in other parts of Asia... MNCs (multinational corporations) might re-ignite conversations around choosing Singapore as the main location for Asean and Asia-Pacific head offices," noted Kartikey Singh, the head of Korn Ferry Singapore's rewards and benefits division. "This will keep continuous pressure on wages... for (the) Singapore market, more than anticipated because of economic slowdown and US-China trade war. We see this pressure building up for the middle to senior level managers, more than junior and entry level graduates."
According to Mr Singh, there's still demand for professionals in engineering roles, followed by IT and sales positions which are hard to fill in Singapore because of the shortage of talent in these areas.
Yet, ironically, employees in the professionals, managers, executives and technicians (PMET) category, who make up over half of the local workforce, are the most vulnerable in the labour market.
They are the hardest-hit in lay-offs and take the longest time to get re-employed - even when the bulk of vacancies are for PMETs.
A big reason is that the skills of many PMETs are no longer suited for the new digital economy.
Many lost their jobs because of economic restructuring and it will take them even longer to re-train for new jobs, because they tend to be older and are specialists set in their old ways.
"The jobs and skills mismatch will not go away," said Manpower Minister Josephine Teo. "In fact we must expect it."
The good news, according to ManpowerGroup's Ms Teo, is that more employers in Singapore are investing in employee training to plug the skill gaps in their workforce - a trend that's likely to grow in 2020.
Said Matthieu Imbert-Bouchard, the Singapore managing director of recruitment consultancy Robert Half: "Singapore's drive to become a smart nation and a digital transformation leader continues to be the catalyst for jobs, as companies look for talent to rapidly digitise their organisations to remain competitive on the regional and global economic stage."
That is why there's a demand for IT contractors because employers depend on experienced contract professionals "to lead and assist with their digital transformation initiatives and projects", he added.
Robert Half's poll of 228 business leaders in Singapore shows 55 per cent of them are "very confident" of their companies' growth prospects in the first half of 2020 and 40 per cent of the business leaders - from IT and finance - intend to "add new positions to their permanent team".
Yet, not all the jobs coming into the market are classified as high-skilled. A big chunk of the 30,400 employment growth in the first nine months of 2019 was in the construction sector, which picked up after three straight years of decline. The sector is labour intensive and depends a lot on low and semi-skilled foreign workers.
Indeed, local employment (5,300) in the sector grew slower than the employment of foreign workers in the first half of 2019, which jumped by 11,600, compared to just 400 in the first half of 2018.
The rebound in the construction sector is likely to continue in 2020, creating a need for even more workers. But the demand for low and semi-skilled workers in the new year will not be confined to foreigners.
Huishan Lim, the general manager of the online hiring platform FastJobs, said that her key clients in the service industries will still need to recruit local workers to fill rank-and-file roles. "The non-PMET sector has remained resilient and we foresee this positive outlook to continue into 2020, as the service and manufacturing industry continue their growth trajectory."
She added that data from FastJobs' platform has shown an upward trend, especially for non-PMET jobs in the services sector.
Yet, the services sector, which added the most jobs - 15,300 - in the third quarter of 2019, is not a shelter for low-end jobs.
Modern services, including finance, insurance and professional services, accounted for much of the job growth in the July-September period of 2019. There was also a spike in workers hired in the health and social services sector. Many economists and recruiters also see such increases sustained in 2020.