Published June 16, 2009

Gloomy first quarter saw jobs lost, salaries cut

72% of layoffs were in manufacturing; nominal pay down 1st time in over 6 yrs

By CHUANG PECK MING

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(SINGAPORE) The first three months of the year were even bleaker for the Singapore economy than earlier thought.

More workers were fired than initially estimated and even nominal earnings fell for the first time in more than six years.

Along with a sharper drop in labour productivity - down 15 per cent over the year, against a 12 per cent decline in the previous quarter - nominal earnings tumbled 3.7 per cent year-on-year in the January-March period.

Related article: Click here for MOM's news release

It was the first such decline in six-and-a-half years and it led to a bigger cut in real earnings than in the October-December 2008 quarter, despite inflationary pressure easing.

Real earnings sank 5.8 per cent in the first quarter, compared with a 2.8 per cent fall in the preceding quarter, according to the Ministry of Manpower (MOM)'s latest report on the labour market released yesterday.

Total employment decreased by 6,200 - the first fall in nearly six years. Redundancies (layoffs and premature termination of contracts) jumped to a new quarterly high of 12,760, more than the preliminary estimate of 12,600 workers made in April.

But there are signs that the rise in redundancies is easing.

The seasonally adjusted overall unemployment rate rose from 2.5 per cent in December 2008 to 3.3 per cent in March 2009, higher than the April estimate of 3.2 per cent.

Unemployment has risen for five straight quarters - and its impact has been broad-based, affecting all age and education groups.

Among the resident workforce, the unemployment rate increased from 3.6 per cent to a five-year high of 4.8 per cent.

'The deepening recession has taken its toll on the labour market, as total employment registered its first quarterly contraction since the second quarter of 2003,' the MOM report concludes.

'The cutback in the manufacturing industry, along with employment losses in the external-oriented services industry, more than offset gains in the domestic- oriented services and construction sectors,' it says.

Falling external demand has hit Singapore manufacturing business hard, leading employment in the sector to plunge by 22,100 in the first quarter.

Even where employment continued to increase, the growth was slower than before.

Construction jobs rose 8,300, less than the gains of 10,700 in the previous quarter and and 14,500 in the first quarter of 2008.

Services as a whole added 7,500 workers in the first quarter of 2009, much lower than the increases in the preceding quarter (17,300) and the first quarter of 2008 (46,500).

'The gains in this sector came mainly from community, social and personal services, supported by public sector hirings,' the report says.

Real estate and leasing services, professional services, and information and communications also contributed to employment gains in the first quarter.

But in services industries that relied on external demand - hotels and restaurants, financial services, transport and storage, and wholesale and retail trade - job losses was the norm.

Still, manufacturing continued to account for most of the workers made redundant in the first quarter, with the proportion rising from 55 per cent in the previous quarter to 72 per cent.

Layoffs in manufacturing jumped sharply from 5,170 to 9,250. In contrast, redundancies in services and construction eased quarter-on-quarter from 3,810 to 3,170 and 390 to 330 respectively.