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More redundancies in 2014 due to restructuring
RESTRUCTURING pains continue to bite, with more workers laid off in 2014 than the year before. Still, labour market conditions remain tight - unemployment averaged just 2 per cent for the whole of last year.
Wage pressures persist as well, with Singapore's real median income rising by 1.4 per cent in 2014. The pace of growth, however, was slower than 2013's "exceptionally high increase" of 4.6 per cent (when bigger increments likely kicked in due to the Wage Credit Scheme).
So said the Ministry of Manpower (MOM) on Friday in its 25-page Employment Situation 2014 report, which revealed that 12,800 workers were made redundant in 2014 - up from 11,560 in 2013 - amid ongoing business restructuring.
The increase in layoffs stemmed primarily from the services sector, which made up more than half (7,100) of all redundancies last year (compared to 5,430 in 2013). Layoffs from the construction sector also rose to 1,500 from 1,120, while redundancies in manufacturing declined to 4,200 from 5,000.
Despite the increase in layoffs, recruitment experts remain unfazed. Said Femke Hellemons, country manager, Adecco Singapore: "We see an increase in layoffs but it's nothing too concerning. The job market remains healthy and employment is still growing strongly."
MOM's preliminary estimates showed that the overall seasonally adjusted unemployment rate declined from 2 per cent in September to 1.9 per cent in December - even lower than the consensus expectation of 2 per cent.
For the whole of 2014, unemployment stayed low, averaging 2 per cent overall, 2.7 per cent for residents, and 2.9 per cent for citizens - broadly unchanged from 2013.
Meanwhile, employment growth among locals rose over 2014 as foreign employment growth continued to moderate. The services sector (118,600) formed the bulk of employment gains, followed by construction (14,500). Manufacturing jobs, however, fell by 4,600.
MOM said the employed pool is estimated to have grown by 129,000 over the entire year of 2014 - lower than the 136,200 in 2013 and similar to the 129,100 in 2012.
Said Nomura research analysts Euben Paracuelles and Brian Tan: "As hiring locals becomes more challenging, employment growth will likely fall further. Unless policymakers ease restrictions on foreign labour, the burden of driving GDP growth will increasingly fall on productivity growth, which has been disappointing so far.
"The pressure to see more visible results from the productivity drive is therefore rising, and we expect Budget 2015 to announce another fiscal deficit of 0.3 per cent of GDP to support the restructuring agenda of boosting productivity."
OCBC economist Selena Ling also noted that the slower employment growth "may suggest that labour force growth through the return of housewives and retirees may have peaked".
In a separate report by MOM, also released on Friday, data showed that Singapore's labour force participation rate for residents rose to a new high of 67 per cent in 2014, driven by continued increases for women and older residents.
Coupled with the fact that the labour market stayed tight with low unemployment, the employment rate of residents aged 25 to 64 rose to another high of 79.7 per cent, up from 79 per cent in 2013 and 72.3 per cent in 2004.
There was also a sustained growth in incomes over the last five years; from 2009 to 2014, the median income increased by 10 per cent or 1.9 per cent per annum after adjusting for inflation. But higher consumer prices meant that this was lower than the gains of 13 per cent or 2.5 per cent per annum in the earlier five years.
As for lower-wage workers at the 20th percentile of full-time employed residents, the income increase over 2009 to 2014 (after adjusting for inflation) was 12 per cent or 2.4 per cent per annum. MOM said this was faster than the gains of 3.4 per cent or 0.7 per cent per annum from 2004 to 2009.