Singapore’s labour market shows signs of recovery as unemployment rates fall for second straight month
SINGAPORE: Singapore’s labour market showed "a broad improvement" in the last quarter of 2020 as preliminary estimates show that unemployment continued to dip in December while more residents found jobs.
The overall unemployment rate fell for the second month in a row in December last year to 3.2 per cent from 3.3 per cent in November, according to advanced estimates released by the Ministry of Manpower (MOM) on Thursday (Jan 28).
The resident - Singaporeans and permanent residents - unemployment rate fell to 4.4 per cent from 4.6 per cent, while the citizen unemployment rate edged down to 4.5 per cent from 4.7 per cent.
Compared to September 2020, the overall unemployment rate in December was down by 0.4 percentage points from 3.6 per cent. However, December’s rate was still higher than the 2.3 per cent recorded a year ago.
The annual average unemployment rates in 2020 also rose in comparison with 2019, with overall unemployment up from 2.3 per cent to 3.0 per cent.
The resident unemployment rate went up from 3.1 per cent in 2019 to 4.1 per cent in 2020, while the citizen unemployment rate increased from 3.3 per cent in 2019 to 4.2 per cent in 2020.
"However, they (annual average unemployment rates in 2020) stayed below the annual rates observed during SARS in 2003 and the global financial crisis in 2009," said MOM.
RESIDENT EMPLOYMENT RISES FOR SECOND STRAIGHT MONTH
Resident employment returned to pre-pandemic levels by end-2020, growing by 28,900 in the fourth quarter of 2020, and 9,300 for the entire year.
Together with the growth in resident employment in the third quarter of 2020, this represents a turnaround from the contractions in the first half of 2020, said MOM.
"Nonetheless, the resident unemployment rate in December 2020 remains higher than in December 2019. This suggests that resident workforce participation was sustained despite the pandemic as more jobseekers joined or remained in the workforce than exited," added MOM.
Non-resident employment shrunk by another 42,400 in the fourth quarter of 2020. For the entire year, non-resident employment plunged by 181,500, or around 16 per cent.
This means overall employment contracted by 172,200 for the whole of 2020.
The decline in non-resident employment was "broad-based across all sectors", while resident employment fell mostly in sectors hit hard by COVID-19, such as accommodation, wholesale trade and retail trade, said the ministry.
Most of the increases in resident employment were in growth sectors such as info-communications and technology, financial services and professional services.
Total employment in the fourth quarter of 2020 shrunk by 13,500, as total employment in the manufacturing and construction sectors continued to decline, largely due to reductions in non-resident work permit holders.
But employment - mainly of residents - grew in the services sector, primarily in public administration and education. Seasonal hiring for the year-end festive period also boosted employment among food and beverage services, and retail trade.
Employment figures cited in the advanced estimates exclude foreign domestic workers, the ministry added.
Explaining why resident employment rebounded but the unemployment rate was still higher than 2019's, a MOM spokesperson said that although hiring has picked up, the economic downturn coupled with new entrants such as graduates into the labour force pushed up the jobless rate.
“We are creating jobs, but I think we are not creating enough at this point in time to actually absorb everybody,” the spokesperson added during a virtual briefing on Thursday.
The total number of retrenchments in 2020 is expected to hit 26,570, more than double the 10,690 seen in 2019. Retrenchments rose for all three broad sectors, mainly in arts, entertainment and recreation, wholesale trade and air transport services.
However, last year’s retrenchment rate - 13.0 retrenched per 1,000 employees - was lower than previous recessionary years, MOM said. Annual incidence of retrenchment during the 1998 Asian financial crisis, 2001 dot-com bust, 2003 SARS and 2009 global financial crisis were 32.7, 26.3, 16.7 and 14.2 respectively.
About 6,100 people are expected to be retrenched in the fourth quarter of 2020, fewer than the 9,120 in the third quarter of 2020. It is the first time the number of retrenchments dipped after five consecutive quarters of increases.
MOM said it "remains to be seen" if the reduction in overall retrenchments will be sustained in 2021, as job losses are likely to rise in the air transport services sector due to ongoing travel restrictions. Restructuring in other businesses may lead to further displacements as well, added the ministry.
“The COVID-19 pandemic had a significant impact on the labour market in 2020. Although latest indicators point to a broad improvement, our labour market is still not back at pre-COVID conditions,” MOM said in a press release.
“Uncertainties in the economic environment, coupled with weak demand conditions, will continue to weigh on the recovery of the labour market. On-going travel restrictions are also likely to deter smooth business recovery in travel-related sectors,” it added.
Manpower Minister Josephine Teo said that significant risks remain and the momentum could stall.
“Unemployment is not where we would like it to be, and we'd like it to come down further," she said.
“What we would pay very close attention to is working together with the agencies that lead specific sectors and identify measures that we might need to take in order to support the workers in those sectors,” she said, adding that the upcoming Budget will lay out what some of these plans are.