Singapore unemployment rate dips to 2.7% in August after brief uptick in July: MOM

SINGAPORE'S unemployment figure dipped slightly in August after a brief uptick in the previous month, the Ministry of Manpower (MOM) said on Friday.

Overall unemployment rate in August fell to 2.7 per cent from July's 2.8 per cent; resident unemployment was at 3.6 per cent, down from 3.7 per cent; while citizen unemployment slipped to 3.8 per cent, from 3.9 per cent, according to MOM's monthly unemployment data.

The ministry said this reflected a temporary easing of manpower demand during Phase 2 (Heightened Alert), or P2HA, from Jul 22 to Aug 18.

Singapore's unemployment rate rose briefly in July, ending an 8-month improvement streak after the situation peaked in September 2020.

For August, there were 84,400 unemployed residents, of whom 75,800 were citizens.

In a Facebook post, Manpower Minister Tan See Leng said Singapore’s unemployment situation over the longer term continues to show a gradual recovery despite the slight increase in July.

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“We do not take this for granted – we are still closely monitoring the public health situation. Recovery is expected to be uneven across sectors, and the domestically-oriented sectors will likely continue to be impacted by Covid-19,” Tan said.

OCBC chief economist Selena Ling said July’s data may be attributable to a “knee-jerk reaction” to the announcement of Singapore’s reversion to P2HA.

“I expect that the unemployment rate may 'bounce' around these levels for a bit as businesses and consumers grapple with the stabilisation-period measures in September and October as well, amid the uptick in Covid cases, but the overall direction should still be a gradual improvement going into end-2021 and into 2022,” she told The Business Times.

Singapore is experiencing its worst Covid-19 wave, with daily new cases exceeding 3,000 for the first time this week since the outbreak began on Aug 23. This has prompted the government to again restrict dine-in group sizes, among other measures, from Sep 27 to Oct 24.

Maybank Kim Eng senior economist Chua Hak Bin said that while the labour market is expected to recover, the process will nonetheless be bumpy, as support measures taper off, even as intermittent Covid-19 restrictions may still be necessary to contain hospitalisations.

"Firms in some sectors – including retail, F&B and hospitality – may need to adjust and right-size their labour needs as business has not returned to pre-pandemic levels. Numbers of petitions for bankruptcies and liquidations have been creeping up in recent months, with the withdrawal of the fiscal support and wage subsidies," Chua said.

While fast-growing sectors such as financial services, healthcare and technology could absorb these workers, the matching process might take time and could lead to some "temporary blips" in unemployment numbers in the coming months, he added.