When Singapore’s economy and consequently, the jobs market were hit in 2020 due to the coronavirus pandemic, the government introduced a slew of support packages to help both employers and workers. For example, businesses were given help with their financing needs through government-assisted loan programmes and initiatives such as the Job Growth Incentive (JGI), which incentivised businesses to hire local workers.
However, given the improving economic conditions and with the shift towards living with the endemic, these support schemes are now being slowly tapered off or phased out. Yet, global headwinds such as high inflation, a prolonged war between Russia and Ukraine, and a resurgence in COVID-19 variants, particularly in China with its zero-COVID policy, may impact economic growth in the coming months.
Hence, the business expectations surveys of the manufacturing and services sectors, released on July 29 July 2022, provide a good sense of the state and sentiment of the Singapore business community as well as its expectations for the jobs market for the next three months.
Total Employment Grew In Q2, With Fewer Retrenchments
The total employment in Singapore for 2Q 2022 grew faster at 64,400, or 1.9%, compared to 42,000, or 1.2%, growth in 1Q 2022. Similar to the past quarter, a larger proportion of total employment in 2Q came from the construction sector.
This sustained job expansion has kept overall unemployment rates low at 2.1%, which is close to pre-COVID levels. While unemployment rates are expected to stay low given the current tight labour market, geo-political risks, high inflation, and interest rate risks may dampen business sentiments and affect demand for manpower for the second half of 2022.
Source: Labour Market Advance Release 2Q 2022
MOM also reported that the number of retrenchments has continued to decline and is expected to be around 1,000 (or 0.5 retrenched per 1,000 employees) for 2Q 2022, with the services sector contributing the most, at 700, followed by the manufacturing sector at 200 and the construction sector at 100.
Resident Employment Increases Were Mainly Due To Higher Skilled Jobs In Growth Sectors
The resident unemployment rate, which was at 3% in April and May, dipped to 2.9% in June. Most of the resident employment increases were concentrated in growth sectors such as information & communications, professionals services, and financial services, according to the advance estimates by MOM. Even at the height of the pandemic in 2020, the financial services and information & communications industries recorded the two highest changes in wage growth for the services industry compared to 2019, underscoring the talent gap.
This strong demand for higher-skilled knowledge workers comes as no surprise given Singapore’s Smart Nation strategy to build a digital economy, digital government, and digital society by working with various private and public stakeholders to drive the whole-of-nation digitisation.
Local workers (aged 40 and above) can tap on the SGUnited Mid-Career Pathways Programme (SGUP) to gain industry-relevant attachment programme to acquire the skills and experience to work in these industries. From its launch in July 2020 until January 2022, more than 7,200 locals were placed and benefited from such attachments.
Construction Industry Expected To Lead Job Growth In 3Q
On the flipside, the construction sector, which hires more non-residents, has contributed to the higher employment of around 25,000 non-residents in 2Q. MOM expects further robust growth in non-resident employment for the coming months as it catches up to pre-COVID levels.
This is to be expected given the well documented construction delays of residential projects, including an outstanding 58 HDB flats as of May 2022 caused by the pandemic and supply chain challenges.
The relaxed border controls and safe management measures from April 2022 have benefited businesses in the construction sector in hiring more workers to backfill the positions in 2Q. Furthermore, as firms ramp up their operations to meet the project deadlines, it stands to reason that more workers would be needed; hence, the higher expected employment numbers for 3Q as well.
Manufacturing Expecting Weaker Business Outlook For 2H 2022
Similarly, the manufacturing sector also added to the total employment numbers by about 12,000, which is an increase from the previous quarter. However, unlike the construction sector, the outlook for the manufacturing sector seems to be less rosy, according to the findings from EDB’s Business Expectations Survey of the manufacturing sector from July to December 2022.
A net weighted balance of 8% of Manufacturers is downbeat about the business outlook for the next 6 months (from July to December 2022). The net weighted balance is used as the barometer for business sentiments and is based on the difference between the weighted shares of positive and negative sentiments. In contrast, transport engineering and precision engineering are the only two clusters within the manufacturing sector that are expecting a more positive outlook for the next 6 months.
Nonetheless, a net weighted balance of 25% of manufacturers anticipate increased employment opportunities in the third quarter of 2022. Although all clusters within the manufacturing sector expect to hire more workers in 3Q, the transport engineering and electronics clusters are more optimistic about their employment outlook.
Services Sector Looking Upbeat About Business Conditions For 3Q
Last but not least, the services sector was the biggest growth driver of employment in 2Q 2022, which accounted for 27,300 workers being employed. This is also an increase from the previous quarter, showing signs of continued recovery for the sector.
The findings from another separate business expectations survey of the services sector by SingStat show that a net weighted balance of 15% of firms expect more favourable business conditions in Q3, unlike the manufacturing sector. Though all the industries within the sector are positive about the business conditions for the next 6 months, firms in the accommodation, food & beverage services, and transportation & storage sectors are the most upbeat about their prospects.
This could be attributed to the reopening of the borders under the Vaccinated Travel Framework in April 2022 which resulted in a greater influx of tourists of 1.5 million visitors coming to Singapore in the first half of 2022. The Singapore Tourism Board (STB) expects Singapore to receive between 4 and 6 million visitors in 2022, highlighting the growth potential of the sector for the rest of the year. Additionally, a strong line-up of events such as the Formula 1 Singapore Airlines Singapore Grand Prix 2022 and Tour de France Singapore Criterium is also expected to attract more visitors.
Given the positive business sentiments, all the industries within the services sector are expected to see an increase in hiring activity in the 3Q 2022. Amongst which, firms in the accommodation industry, recreation, community & personal services, and retail trade have a higher employment forecast, signifying the greater need for workers in these industries.
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