Singapore Q1 unemployment rate up to 2.4%; Q2 numbers to worsen as virus hits
Economist sees employment shrinking by 80,000-100,000 in Q2 as circuit breaker measures only began in April
Singapore
SINGAPORE'S total employment for the first three months of 2020 registered its sharpest quarterly contraction in 17 years amid the novel coronavirus outbreak, and authorities warned the labour market in the months ahead could soften further.
Estimates released by the Ministry of Manpower (MOM) indicate that total employment, excluding foreign domestic workers, in the first quarter shrank by 19,000, compared with the 24,000 contraction seen in Q2 2003 during the peak of the severe acute respiratory syndrome (Sars) outbreak.
Overall unemployment rate rose to 2.4 per cent in Q1, up from 2.3 per cent in end-2019. At the same time, overall retrenchments hit 3,000 in Q1, higher than the 2,670 seen in the preceding quarter. The service sector bore the brunt of retrenchments with 2,200 job cuts, while the construction and manufacturing sectors respectively shed 200 and 600 jobs.
While these figures show a relatively small decline compared with the highs seen at the peak of the Sars outbreak and 2009 global financial crisis, Manpower Minister Josephine Teo cautioned that the data should be understood in context. This is because the economic mood and activity in January was very different from that in February and March, when the Covid-19 outbreak had taken a turn for the worse.
"What the numbers currently suggest, even though they're preliminary was that in the first quarter, local employment not only held up, it actually still managed to grow a little bit," Mrs Teo said in a media briefing.
Although the ministry does not release a breakdown for preliminary figures, Mrs Teo said, foreign employment saw a much sharper reduction. This is partly because of travel restrictions introduced in February shortly after the coronavirus emerged, which required workers to get an approval before they were allowed to return to Singapore from China.
"So the numbers were actually kept to a very low level and we see that perhaps some of them still have not returned," Mrs Teo said. She added that companies may have decided to ask them not to return or chosen not to hire any more workers.
OCBC's chief economist Selena Ling said she is expecting Q2 data to be worse, since Singapore's circuit breaker measures only began in April.
In addition, while the service sector was the worst hit in Q1, the impact is spreading to the construction and manufacturing sectors, given that only essential businesses are allowed to operate, she said.
"That said, it is not all doom and gloom as there are still industries that fare relatively better such as healthcare, public administration and professional services," Ms Ling said.
Maybank's senior economist Chua Hak Bin called Q1 the quarter "before the real storm", since the two-month circuit breaker is putting more than 1.3 million workers in hibernation.
"Companies came under severe cash flow pressure during the second quarter and retrenchments will likely jump. Employment will likely contract by about 80,000 to 100,000 in the Q2, quadrupling from the magnitude of Q1," Dr Chua said.
Already, there are indicators that present a sense of foreboding.
The ministry has so far received about 3,000 notifications from companies intending to implement cost-savings measures, Mrs Teo said. The notification, mandatory since mid-March, is required for employers planning to cut more than 25 per cent of their employees' salary.
Mrs Teo said this would cover about 100,000 workers or 3 per cent of the workforce.
In addition, Workforce Singapore chief executive Tan Choon Shian said the agency has so far received a 10 per cent increase in notifications from employers on retrenchments, compared with the same period last year.
Mrs Teo hinted that the actual employment landscape could be grimmer than data suggests, since the circuit breaker measures have also made data collection more challenging.
"We have to accept that it may well be that the companies have already exercised some trimming of their workforce, just that they haven't gotten around to telling us about it," Mrs Teo said.
Meanwhile, about 13,000 jobs have been posted on SGUnited Jobs, a platform aimed at jobseekers displaced due to the pandemic, as of mid-April, Mr Tan said.
Some local companies said they have managed to fill urgent positions through the initiative, although with varying levels of success. Telco Singtel said it managed to fill 150 positions within a week, as its offshore operations were affected by lockdowns abroad. The roles include customer service officers managing its hotlines as well as field engineering work.
