Employment growth loses steam in Q2; wage hike plans, hiring also ease: MOM
Tessa Oh
SINGAPORE’S employment levels expanded in the second quarter of 2023, but at a much slower pace than before, in signs that labour demand is cooling.
Total employment – excluding migrant domestic workers – rose by 23,700 in Q2, the Ministry of Manpower (MOM) said in a preliminary report on Thursday (Jul 27).
While this marked the seventh consecutive quarter that employment levels have expanded, it was at a “significantly slower pace” compared with previous quarters, said MOM.
Giving its outlook, MOM said labour market conditions could soften in the coming quarters.
“The slowdown in total employment growth reflects the moderation in our economic growth in previous quarters, as a result of global economic headwinds,” it said.
Employers also appear to be adopting a more cautious stance towards hiring and wage increases, the ministry added.
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The proportion of companies which indicated an intention to hire in the next three months fell to 58.2 per cent, from 64.8 per cent, while the proportion of those that intend to raise wages fell to 28 per cent, from 38.2 per cent.
Maybank economist Chua Hak Bin said that employment growth may continue moderating in the third quarter, but is not likely to contract as Singapore’s economy appears to have dodged a recession.
“The softening labour market is good news for the Monetary Authority of Singapore, which has been tightening to tackle core inflation and wage cost pressures,” said Dr Chua.
In the near term, employment growth could ease and become uneven across industries, said MOM.
Tourism-related sectors could continue to improve, but outward-oriented sectors such as wholesale trade and information and communications would likely soften.
Singapore’s employment growth in the second quarter was led by non-residents, mainly in the construction sector, on the back of sustained demand for private and public sector projects.
The bulk of non-resident employment growth in the sector came from work permit holders, said the ministry.
Meanwhile, resident employment contracted slightly in the second quarter, though it “still remained well above its pre-pandemic level”, it added.
Employment levels shrank mainly in the food and beverage services and retail trade sectors, which it noted was not unusual for the first half of the year.
Given these seasonal factors, the contraction in resident employment is not a major concern, said Dr Chua.
In contrast, resident employment in the community, social and personal services; financial services; and professional services sectors continued to grow – though this has slowed amid global headwinds.
Retrenchments fell to 3,200 in Q2, from 3,820 in the previous quarter, after rising over the past three quarters.
MOM cited business re-organisation or restructuring as the top reason for layoffs in the second quarter.
The services sector – particularly the information technology services and wholesale trade segments – was the key contributor to retrenchments.
Layoffs in the manufacturing sector fell in the second quarter, following larger-scale retrenchments in the first quarter of 2023 and the fourth quarter of 2022.
Dr Chua said the uptick in hiring in the sector is an encouraging sign that some modest manufacturing recovery may materialise in the second half.
The latest manufacturing output figures also suggest that the worst of the manufacturing contraction may be behind.
MOM said the number of retrenchments in the remaining sectors also “declined or stayed broadly stable”.
Unemployment rates remained unchanged in June, after edging up in May.
Overall employment was at 1.9 per cent, resident at 2.7 per cent, and citizen at 2.8 per cent.
More details on changes in resident and non-resident employment will be released in September.
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