Published January 31, 2009

Singapore's job market shrinks

Overall unemployment rate averaged 2.3 per cent last year, up from 2.1 per cent in 2007

By LEE U-WEN

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(Singapore)

NEW figures released by the government yesterday underscore how bleak the job market is. The overall unemployment rate averaged 2.3 per cent last year, up from 2.1 per cent in 2007 - the first time that it has risen since the record high of 4 per cent in 2003, according to preliminary estimates by the Ministry of Manpower.

The seasonally adjusted overall unemployment rate rose to 2.6 per cent in the three months to December from 2.2 per cent in the third quarter, as Singapore continued to feel the heat of retrenchments and weaker growth because of the global downturn.

About 73,100 Singapore residents were jobless in December, a 58 per cent jump year-on-year. On average, 62,900 residents were unemployed in 2008, compared with 56,700 in 2007.

Job growth slowed significantly, with just 26,900 jobs created in October-December 2008 - less than half the total gain of 55,700 in Q3 and the 62,500 jobs added in Q4 2007. The whole of 2008 saw 227,200 jobs added, down from 234,900 in 2007.

Related articles: Click here for MOM's news release

The ministry's findings show that manufacturing led the way in terms of employment contraction, as the sector bled for the first time in more than five years. In total, 6,200 manufacturing jobs were lost in Q4, a sharp drop from 4,600 created in Q3 and 10,900 added a year earlier. For the whole of 2008, manufacturing employment grew 20,300 - less than half the increase of 49,300 in 2007.

The services industry saw fewer new jobs for a third straight quarter, with 21,000 created in Q4 2008, down from a high of 46,500 in Q1 that year. Construction, meanwhile, added 10,800 jobs in Q4 2008, a steep decrease from 16,500 in Q3.

For the whole of 2008, a total of 13,400 workers were retrenched, more than twice the 7,675 in 2007. Manufacturing and services accounted for the bulk of job losses, with 8,300 and 4,900 workers retrenched respectively.

Delving deeper into the Q4 figures, the ministry said that 7,000 workers lost their jobs during the three-month period, up substantially from 2,346 in Q3 and 1,966 in the same quarter a year earlier.

The number of workers retrenched in manufacturing more than doubled from 1,709 in Q3 to 3,700 in Q4. Driven by lay-offs in financial services and wholesale trade, retrenchments in services increased more than fourfold to 3,200, from only 562 in Q3.

Besides retrenchments, 1,500 workers were released prematurely from their contracts in Q4. For the whole of 2008, 16,000 workers were made redundant, almost double the 8,592 in 2007.

The labour movement said on Thursday that it aims to try and keep job losses to below 29,000 this year - a level last seen during the Asian financial crisis in 1998.

Speaking to reporters at a Chinese New Year dinner in Choa Chu Kang last night, Acting Manpower Minister Gan Kim Yong called the target 'very ambitious and challenging' but said that it is crucial for the government to work with its tripartite partners to try and save as many jobs as possible.

The ministry noted that both locals and foreigners benefited from job creation in 2008. Local employment grew by 70,400, although this was down from 90,400 the previous year. Foreign employment rose by 156,900, up from 144,500 the previous year.

As the economic downturn deepened, job growth for locals and foreigners slowed in the final quarter of 2008. As at December, there were 1,057,000 foreigners in the Singapore workforce, the ministry said, about 36 per cent of the 2.96 million people employed. The majority of the workforce - 64 per cent or 1.9 million people - were locals.

Citigroup economist Kit Wei Zheng said that the extent of employment deterioration is 'more benign' than expected, with net job creation still remaining positive.

'But we should caution that the labour market down-cycle is still in its early days,' he said. 'As retrenchments and other redundancies continue to mount, we expect net job creation will turn negative within the next one to two quarters, likely peaking somewhere in the second half of 2009.

'Manufacturing will likely bear the brunt of the job losses, with financial services, real estate and other services sectors also expected to lose jobs.'