Connect with us

Business & Career

Why Is The Unemployment Rate Still Increasing Even Though The Government Is Announcing More Job Opportunities?

Job seekers are looking for employment while there are multiple sectors in Singapore that want to hire. So why is the unemployment rate still increasing?


The Government recently introduced more than 1,900 work opportunities in the early childhood sector, including jobs, traineeships and attachments, as mentioned by a Ministry of Manpower (MOM) weekly report on Nov 2. Of these, the majority are full-time PMET jobs, with 80% of them for professional, manager, executive and technician (PMET) roles such as pre-school teachers, centre leaders and childcare services managers.

The resident unemployment rate in Singapore is currently at 4.7% as of September 2020, rising from previous quarters. According to the 2020 Q3 labour report by the Manpower Ministry, retrenchments are expected to increase in Q4 in Manufacturing and Services, Arts, Entertainment & Recreation and Air Transport, which continues to be affected by COVID-19 and the need for safe management measures.

Source: Ministry Of Manpower

At the same time, since mid-August, the Ministry of Manpower (MOM) has released – on a weekly basis – the Jobs Situation Report detailing key updates and information in the jobs market. This has been valuable in letting job seekers know what are the sectors that are looking to hire and the available job opportunities in each of these sectors.

Read Also: 10 Editions Of MOM’s Jobs Situation Report: 10 Things We’ve Learned

So why is the unemployment rate still increasing (and expected to increase in the foreseeable near future) in spite of the fact that there are multiple sectors that are still looking to hire workers?

Frictional Unemployment

Frictional unemployment is the result of voluntary employment transitions within an economy, notwithstanding lay-offs and other retrenchment exercises. Workers choosing to leave their jobs in search of new ones and fresh graduates entering the workforce for the first time can be considered frictional unemployment.

Due to the rapidly changing economic landscape, Singaporeans may be wedged between a rock and a hard place, technological disruption and lack of relevant skills. Fresh graduates may find that the jobs that were foretold during their university days are no longer relevant. After all, four years to complete an undergraduate degree at a local university is a long time.

Undergraduates who did not look for internships and take first steps to venture into the market prior to graduation may find it difficult to connect with the right employers or jobs. Moreover, the lack of experience and skills may also result in employers glossing over youthful vigour, opting for seasoned hands-on deck especially in choppy waters.

Read Also: Assessing A Job Offer: What To Look For Beyond Your Salary

Singaporeans quitting their jobs to look for higher pay also adds to frictional unemployment. In other cases, workers may resign from their job to go back to school or learn a new skill because they believe they need the skill to earn more income.

Frictional employment may, at times, actually be beneficial if it is a sign that workers are voluntarily seeking better positions, providing businesses with a wider array of qualified employees after reskilling takes place.

Mismatch of Expectations: Are Singaporeans Expecting Too Much?

As Manpower Minister Josephine Teo explained in an interview, the rise in the unemployment rate is likely because while more locals are getting jobs, the pool of job seekers has also grown.

With the supply of jobs unable to keep up with the increase in demand, with senior-level job seekers competing with fresh graduates for entry-level positions, the mismatch of expectations of the kind of jobs fresh graduates think they should have may also be contributing to the increase in the unemployment rate.

It is no surprise that fresh graduates from local and private universities will aim to go for associate to entry-level positions in reputable companies upon graduation.

However, the current job market situation means that they will have to compete with older and more experienced workers who are searching for the same positions that would usually go unequivocally to fresh graduates. In the same vein, more experienced workers who were recently retrenched also find themselves either having to stomach a steep pay cut, or remain unemployed while they look for jobs that have equal or higher pay compared to what they were used to getting, among other considerations.

Government Support Is Temporary

Companies are also cognisant of the fact that the jobs support initiatives by the government will end once recovery is in sight. Many of these initiatives will cease in 2021, and many firms that were actively recruiting in 2020 may have already filled their headcount.

This means that less qualified job candidates who have not been able to find jobs during the pandemic may find themselves in an even tougher position in 2021, when schemes like the Jobs Support Scheme (JSS) end meaning that firms are no longer subsidised for additional headcount.

For companies, it also means that they might have to reconsider adding more labour costs to their balance sheet, knowing that the deadlines to subsidies are looming. This may also be a contributing factor as to why re-entry into employment has declined.

In such times, the still unemployed may have to look beyond roles that they are typically comfortable with and to seriously consider alternative career paths that might not have been appealing initially but are now growing due to national interests or market needs (with early childhood as an example).

During this challenging period, it’s going to be important to remain flexible and change with market demands rather than to stay in an entrenched position hoping for the right opportunities to come by.

Read Also: Top 6 Transferrable Skills Employers Are Looking For, According To MOM

DollarsAndSense.sg aims to provide interesting, bite-sized and relevant financial articles.

Learn together with like-minded Singaporeans at the Personal Finance Discussion SG Facebook Group by discussing a range of personal finance topics.

If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.