Quick take: Further MAS easing depends on forecasts downgrades and job market cracks

UNEMPLOYMENT in Singapore remained low at 2 per cent overall for the whole of 2014, broadly unchanged from 2013, according to preliminary estimates released by the Ministry of Manpower on Friday.

In the fourth quarter, seasonally adjusted unemployment fell to 1.9 per cent compared to 2 per cent in the third quarter.

For the whole of 2014, a total of 12,800 workers were laid off, higher than the 11,560 in 2013.

Here are some comments on the latest labour report:

Citi economist, Wei Zheng Kit:

"Fall in unemployment rate despite increase in redundancies suggests supply constraints remained key to job market tightness in 4Q.''

"Further MAS easing depends on forecasts downgrades and job market cracks. With the labour market still tight for now, the recent slope reduction was dominated by inflation forecast downgrades, and a slight downshifting of growth expectations, likely to the 2-3% range. Further easing in Apr to a neutral (i.e zero percent slope) would require further downgrades in growth/inflation outlook, which seems unlikely in the absence of additional shocks.''

"Elevated price levels may also pose a risk to inflation expectations in an election year, while upstream cost pressures have not disappeared. Most importantly, cracks in the labour market would indicate recessionary conditions justifying a neutral policy stance. Investors should keep an eye on newsflow on mass layoffs and/or falling vacancies, with upcoming Budget measures for SMEs possibly providing further clues in this regard.''

Randstad Country Director - Singapore, Michael Smith:

"Business leaders in Singapore are increasingly looking to align job scopes and leverage technology to reduce labour costs. This is driven by a growing focus on workforce productivity and efficiency, particularly in the services and construction sectors. This is a contributing factor to the rise in redundancies in Q4 2014 as well as the whole of last year.''

Adecco, Singapore Country Manager, Femke Hellemons:

"The employment situation report confirms that in Singapore, demand for highly-skilled workers now far exceeds the talent pool, reflecting the need for employers to be increasingly creative in their salary packages- offering attractive remuneration, flexibility and training to capture the best candidates."

"We can see an increase in layoffs but nothing too concerning. The job market remains healthy and employment is still growing strongly."

"The expected increase of redundancy in the manufacturing sector is a sign that their strategy of restructuring has progressed."