• MOM’s latest labour market report showed that the long-term unemployment rate has risen
• Economists said this is due to some sectors being hit harder than others by the pandemic
• They expect labour market conditions to improve slowly as a result
• They warned that a decline in foreign workers may dampen recovery in the future
   

SINGAPORE — Referring to official figures put out on Thursday (Dec 17), economists said that an increase in the proportion of residents who have been unemployed for at least 25 weeks could be attributed to the Covid-19 pandemic hitting some sectors worse than others.

They added that some retrenched workers may need training to enter other sectors, while others may be reluctant to take jobs on offer because these are unappealing to them.

The latest Ministry of Manpower (MOM) report on the labour market showed that in September, 22,000 people had been jobless for at least 25 weeks — the definition used by MOM for long-term unemployment. This is a jump from 18,600 in June.

This means that the long-term unemployment rate for residents rose to 0.9 per cent in September, up from 0.8 per cent in June, a trend that MOM said “bears close watching”.

On the other hand, the ministry said that resident employment has recovered to almost pre-pandemic levels, standing at 2.34 million in September — 0.4 per cent shy of the figure from the same month last year.

Economist Song Seng Wun from CIMB private banking said that the rise in long-term unemployed numbers is likely because some of the sectors most badly hit by the coronavirus are still struggling to get back on their feet, and workers retrenched from these sectors also face greater challenges switching to work in different sectors.

“While there are plenty of job opportunities, some of the areas where companies are hiring do not appeal to those (who have been retrenched),” Mr Song said, citing as examples the healthcare and construction industries.

Some of these workers may also require more extensive retraining to jump into the industries that are doing well, and this will take some time, he added.

Ms Selina Ling, head of treasury research and strategy at OCBC bank, said that the increase in the long-term unemployment rate is also due to structural issues such as the digital disruption rendering some skills obsolete.

Agreeing, economist Chua Hak Bin from Maybank Kim Eng said it is likely that some of these jobs would be lost permanently, not just because of digitisation but also because firms are finding ways to cut costs and become leaner during this period.

SLOW RECOVERY EXPECTED

Looking ahead, economists interviewed by TODAY said that they expect to see a slower and more gradual recovery in the labour market.

Senior economist Irvin Seah from DBS bank said that this is because employers are still adopting a rather conservative mindset when it comes to hiring, because they want to be sure of their potential future earnings before deciding to increase costs.

On the other hand, Ms Ling said that it is still too early to tell if the labour market is on “strong legs of recovery” yet, since it is still not clear how much vaccination progress has been made and how soon international borders will reopen.

Therefore, some firms could still face more difficulties the longer the pandemic drags on, which would mean retrenchment rates could still climb higher, she said.

Echoing these sentiments, labour Member of Parliament (MP) Patrick Tay said that the recovery of the labour market will be a “slow process” as uncertainties remain on what course the pandemic will take.

Mr Tay, who is also assistant secretary-general of the National Trades Union Congress (NTUC), said: “Looking ahead, recovery is also likely to be uneven, with some sectors such as modern services — financial, ICT and professional services — bouncing back and growing, while others such as aviation suffering from a more prolonged impact.”

MP Desmond Choo, also an assistant secretary-general at NTUC, said that because of this, some groups of workers will need more help with reskilling and moving to new jobs and sectors.

FOREIGN UNEMPLOYMENT

Dr Chua of Maybank Kim Eng said that one immediate concern to look out for would be whether the “mass exodus of foreign workers this year will come back to haunt us next year” and dampen the economic recovery here moving forward.

The MOM report showed that non-resident employment, excluding foreign domestic workers, declined by 73,200 to 1.02 million in September — sharper than the falls seen in the first two quarters of the year.

“Businesses may not be able to capitalise on the (economic) upswing given the foreign manpower constraints,” Dr Chua said, refrring to the supply bottleneck that has been brought about because of the ongoing border restrictions and the tighter foreign manpower measures that were introduced this year.

However, Mr Seah of DBS said that employers should see this as a window of opportunity to embrace the calls to build a strong Singaporean core workforce and look into how they can make changes to their hiring practices.

“When the borders reopen and when the economy picks up, I do hope that we will not switch back to the old ways of being overly reliant on foreign workers,” he said.