Singapore employment rises 75,600 in Q3 but momentum may be easing

THERE are early signs that Singapore’s labour market improvement is slowing as economic growth eases, though employment kept rising in the third quarter of 2022, according to advance figures from the Ministry of Manpower (MOM) on Friday (Oct 28).

Total employment – excluding migrant domestic workers – rose 75,600 on the quarter before, extending Q2’s robust growth of 66,500. But there was a “slight uptick” in unemployment rates, and a rise in retrenchments, though both remained on par with pre-Covid levels.

“In the coming months, a deteriorating global economic environment, higher global inflation, as well as geopolitical tensions could affect the labour market outlook. Some unevenness in employment growth may emerge across sectors,” said MOM.

September’s rise brought total employment above pre-pandemic levels by 1.7 per cent. But Maybank analyst Chua Hak Bin noted that many sectors such as hospitality, construction and healthcare still experience acute labour shortages. He expects that full-year employment growth “may reach record levels and exceed the highs reached during the population and economic boom in 2007”.

Some 33,000 of the net jobs added in Q3, excluding migrant domestic workers, were in services. Employment rose by 30,500 in construction and 12,100 in manufacturing.

Non-resident employment led the expansion, growing across all sectors in a continued rebound towards pre-Covid levels. The increases were mainly in the foreign worker-reliant construction and manufacturing sectors.

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When pandemic curbs were eased, manpower demand rose in the consumer-facing industries of retail and food and beverage services – but this was alleviated by rising non-resident employment in those industries, keeping pace with the previous quarter.

Resident employment also rose in Q3, but at a slower pace, though no figures were provided. Figures for resident and non-resident employment will be released in mid-December, alongside other indicators such as job vacancies.

For residents, industry trends were mixed. Employment gains came mainly from outward-oriented sectors such as information and communications, professional services, and financial services. Administrative and support services saw sustained decline, “partly reflecting the gradual scale-back of Covid-related occupations”, said MOM.

In Q4, employment demand in tourism and consumer-related sectors is expected to remain supported by recovering international visitor arrivals and year-end festive season hiring. But trade-reliant sectors are expected to see subdued growth as external demand weakens.

Unemployment rates had trended down to a six-year low in August, but edged up slightly in September. The overall rate was 2 per cent, up from 1.9 per cent.

Unemployment rates also rose for residents, to 2.9 per cent from 2.7 per cent before; and for citizens, to 3.1 per cent from 2.8 per cent. There were 70,900 unemployed residents in September, up from 69,300 in June.

Retrenchments also rose in Q3 to 1,600, up from Q2’s all-time low of 830. These were from manufacturing, mainly due to product lines being discontinued, and services, mainly due to business reorganisation or restructuring.

In a Facebook post responding to Friday’s figures, National Trades Union Congress assistant secretary-general Patrick Tay said he was “cautiously optimistic” that retrenchment and unemployment will remain low for the rest of 2022.

But the biggest challenge is the “structural mismatch of jobs, skills, and expectations”, as well as the imperative to provide work and workplace flexibility, he added.

Based on forward-looking data from polls, firms remain optimistic about hiring, with a slight uptrend in the share of firms looking to hire, said MOM.

Rising inflation has prompted global discussion of wage-price spirals: when rising prices spur workers to demand higher wages, further increasing business costs. The risk of this in Singapore remains low for now, said MOM, noting that firms remain prudent with only one in four intending to raise wages in the next three months.

Tay noted that the MOM might be aiming “to allay fears and concerns over wage-price-spiral in the economy and to reassure the market that this may not be out of control”, especially given “ the relatively mixed and uncertain outlook for 2023”.

“I also expect tripartite partners would want wages to rise in tandem with productivity,” he added.