On 14 September 2020, the Ministry of Manpower (MOM) released its Statement on Labour Market Developments in 1H2020, for the period from January 2020 to June 2020.
Many may have anticipated poorer numbers given that the 1st quarter labour report covered only the period until March 2020 – before the 2-month long circuit breaker measures. However, some of the statistics reported by MOM appears to be even worse than anticipated given the various scheme, including the Job Support Scheme (JSS), to help keep workers employed.
We took a look at the report, and highlight 5 main takeaways we should understand from the report.
#1 Citizen Unemployment Rates Rose
Citizen unemployment rose sharply in the first half of 2020. While the 1H2020 report indicated that Citizen Unemployment rate was 4.0%, MOM releases unemployment stats on a timelier basis – indicating the latest Citizen unemployment rate at 4.3% as at July 2020. MOM will continue to release seasonally adjusted monthly unemployment rates moving forward.
While this may seem high, MOM clarified that this was below the Citizen unemployment levels Singapore experienced during SARS and the Global Financial Crisis (GFC).
The report also highlighted that the change in resident unemployment rate of those below 30 was most significant – growing 2.3 percentage points in the last 2-year period to 7.3%. This is likely where the SGUnited Traineeship programme will become essential in helping fresh graduates connect to an employment opportunity as soon as possible.
#2 Total Employment Recorded The Largest Half-Yearly Reduction On Record
While unemployment rates were still slightly ahead than the peak of past recessions, the first half of 2020 saw the largest ever half-yearly decline in total employment numbers in Singapore’s history.
Close to 130,000 people exited their jobs in the first half of 2020. This number is likely worse today, evidence by the continued growth in unemployment figures after June 2020.
The brunt was borne by foreigners, with foreign employment falling 5.7% (-66,400), which was sharper than the 2.7% (-62,700) decline in local employment. Work Permit & Other Work Passes saw job cuts of 51,100, S Passes experienced 11,200 job cuts and Employment Pass holders saw 4,100 job cuts.
#3 Retrenchments Rose To 11,350 In 1H2020
More than double the number of people – or 8,130 – were retrenched in the second quarter of 2020, compared with the first quarter. This brought the total number of retrenched employees to 11,350.
According to MOM, this was higher than the SARS period, but not as high as the largest single-quarter retrenchments during the Global Financial Crisis (GFC) in the first quarter of 2009. However, we have to understand that the Jobs Support Scheme (JSS), which paid up to 75% of employees’ salaries during the circuit breaker period and will continue to provide support for employee wages up to March 2021, may have saved thousands of jobs in the interim.
Over 50% of those retrenched were PMETs – a topic which has been actively debated in parliament recently. Degree holders were also more likely to become retrenched, with those in their 40s to 50s most affected.
Also worryingly, the 6-months re-entry rate of those retrenched fell to an all-time low in 2Q2020 at 58%. Compared to the past, retrenched employees today are finding it harder than ever to find alternative employment once they are out of a job.
#4 Unprecedented 81,720 Employees Placed On Short Work-Week Or Temporary Layoffs
Another thing the retrenchment figures do not record is the staggering 81,720 employees placed on short work-week or temporary layoff in 2Q2020. While this is likely due to the circuit breaker measures, government support measures may have stopped a significant proportion of this figure becoming officially retrenched.
The Construction (25,560), Manufacturing (ex. Electronics) (12,940) and Food & Beverage Service (7,690) sectors were the worst hit.
#5 Fewer Job Vacancies In Singapore (From 46,300 In March 2020 To 42,400 In June 2020)
As more get retrenched, the ratio of job vacancies to unemployed persons (0.57 in June 2020) will likely worsen. With fewer vacancies, those retrenched may continue to stay out of a job for a longer period.
Any continuing depression of the global and local economy will continue to weigh on local companies further, which will likely lead to fewer job openings and vacancies going forward.
What Lies Ahead – A Few Bright Sparks Remain In The Singapore Economy
The Ministry of Trade & Industry (MTI) projects Singapore GDP for 2020 to come in at -7.0% to -5.0%. While this bodes for a gloomy final quarter in Singapore, a few bright sparks remain in the local economy.
Job vacancies actually rose in the Financial Services, Wholesale Trade, Food & Beverage Services, Administrative & Support Services and Public Administration and Education sectors.
Companies in the Electronics and Precision Engineering clusters are likely to expand, “driven by sustained global demand for semiconductors and semiconductor equipment”.
The Biomedical Manufacturing cluster is also expected to grow, “supported by the production of pharmaceutical and biological products”.
Companies in the Information & Communications sector is also projected to expand this year, “on the back of continued demand for IT and digital solutions”.
The Finance & Insurance sector will be supported in part by the strong demand for digital payment processing services.
Obviously, consumer-facing and tourism-related sectors were the hardest-hit, especially by the circuit breaker measures. We have already seen SIA announcing that it will cut 4,300 positions this week – this and many others will be reflected in the labour market statistics in the following quarters.
Continued Government Support To Ready The Economy For The Upturn
In responses to this generational crisis, close to $100 billion, worth 20 years of Singapore’s surpluses, has been thrown at the Covid-19 downturn. While the economic outlook continues to weaken in Singapore, measures introduced in the four budgets over the past few months have cushioned the economic fallout in the labour market.
MOM’s announcement also states that “unemployment rates remained lower than in previous recessionary (peaks)”, which is a positive outcome of the measures and provide companies a platform to build and evolve from. It remains to be seen whether the jobs statistics will worsen once schemes such as the Job Support Scheme ends.
The National Jobs Council (NJC) continues to spearhead the efforts by the government and business leaders to provide 100,000 jobs and skills opportunities through the SGUnited Traineeship and SGUnited Mid-Career Pathways Packages.
The government itself has brought forward its hiring plans in the public service and publicly-funded institutions. The government has also set aside $1 billion to support hiring private sector companies to bring forward their hiring plans through the Jobs Growth Incentive (JGI).
Workforce Singapore (WSG) has intensified its efforts to help locals in their job search as well, including setting up 24 SGUnited Jobs & Skills Centres across all HDB towns, growing a pool of Career Advisors to complement WSG’s career coaches, and enhancing digital career matching services to reach more jobseekers.
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