Resident employment rebounds, but retrenchments still rising

Singapore

ALTHOUGH Singapore's resident employment levels bucked the trend and recovered to near pre-pandemic levels in September, the labour market is expected to remain weak in the months ahead.

Resident employment stood at 2.34 million in September, recovering from 2.29 million in June and inching closer to the pre-Covid-19 level of 2.36 million seen in December 2019, according to preliminary data from the Ministry of Manpower (MOM) on Friday.

During a media briefing, Manpower Minister Josephine Teo said the growth in resident employment is partly attributed to the resumption of activities as Singapore began its phased reopening, after the Republic's "circuit breaker" period, or partial economic shutdown, in April and May.

"Some positions had gotten vacated in the second quarter, and so in the third quarter, since business activities have resumed, there is a little bit more backfilling of those positions," Mrs Teo said.

Employers and workers have also been very invested in collective efforts to save jobs, such as through wage cuts and retraining, she added.

On the whole, however, total employment, excluding foreign domestic workers, shrank by 26,900 in the third quarter of 2020, although this is far slower than the 103,800 seen in the previous quarter.

The ministry attributed the decline to the continued contraction in non-resident employment, which saw a steady slide to 1.03 million in September, compared with 1.1 million in June and 1.17 million in December 2019.

Noting that non-resident employment has borne the brunt of Covid-19's impact, OCBC chief economist Selena Ling said: "There may be a limit to how far this can go without affecting the competitiveness of the Singapore economy."

Meanwhile, retrenchments continued to rise in Q3 to 9,100, up from 8,130 in Q2. Although the pace has slowed, Q3's figure has exceeded the quarterly peak of previous recessions with the exception of the 2009 global financial crisis, which saw 12,760 layoffs.

Desmond Choo, MP for Tampines GRC and chairperson for the government parliamentary committee for manpower, said in a Facebook post that the rising retrenchments are still a concern, adding that it will likely continue to rise as companies adjust their business plans "for a longer winter".

Citi economists said the acceleration of net job losses of foreigners despite the re-opening indicates that a "substantial economic slack" remains, while the convergence between net job losses and rising retrenchments may suggest larger corporates are facing pressures to downsize.

On the whole, unemployment rates rose across the board between August and September, with overall unemployment growing to 3.6 per cent from 3.4 per cent.

Still, Chua Hak Bin, Maybank Kim Eng senior economist, believes there are signs the job market is on the mend, although the recovery to pre-pandemic levels may take two to three years. He has also improved his unemployment projection, believing it may peak at about 4 per cent instead of his earlier expectation of 4 to 4.5 per cent. Full-year job losses may come in at about 150,000, instead of his earlier estimate of around 200,000, he added.

UOB economist Barnabas Gan said the slower decline in retrenchment and overall unemployment rate suggest that Singapore's fiscal measures from recent budgets have likely limited further deterioration of the labour market, with Q4 possibly seeing a pick-up. He believes unemployment could end at 3.5 per cent in Q4.

Ms Ling however is raising her unemployment forecast to 3.9 per cent, from 3.7 per cent. She said: "It's a trade-off between the ramp-up in economic activities, especially for construction and domestic services once we shift to Phase 3 versus the ticking clock for the various support schemes, which will be tapered for selected industries going into 2021."