SINGAPORE — The number of employed Singapore citizens and permanent residents fell for the first time since the second quarter of 2020, according to the Ministry of Manpower’s (MOM) latest labour market update released on Thursday (Sept 14).

Resident employment contracted by 1,200 in the second quarter of 2023 despite “robust increases” in sectors such as community, social and personal services and financial and insurance services.

The number of people employed in retail trade and food and beverage services dropped because of seasonal factors, and offset the growth in other sectors, MOM said.

“Usually in the second half of the year, close to September until December, and sometimes stretching a little bit into the Chinese New Year, we have all these year-end festivities as well as we have the (Formula One race),” said Mr Ang Boon Heng, director of Manpower Research and Statistics at MOM.

Many people are hired for temporary work related to these events, and that tapers off in the first half of the next year, he said.

“They tend to be students or part-time (workers),” Mr Ang added.

MOM said it does not expect the contraction in resident employment to persist. Hiring will be boosted by the recovery in tourism and the year-end celebrations, though it may not be as strong as in 2022, MOM said.

"What is important is that there (is) still hiring," said Manpower Minister Tan See Leng at a media briefing on the labour market update. He added that the second quarter typically sees weakness in some sectors.

"I wouldn't act on one quarter's drop, but overall... we should not be complacent."

Separately, Dr Tan said during a visit to Dyna-Mac Engineering Services that businesses and workers need to be ready for the downside risks in the global economy. He noted that the Ministry of Trade and Industry's GDP growth forecast for the year is 0.5 per cent to 2.5 per cent, below last year's 3.6 per cent.

"Our country’s external demand outlook for the rest of the year remains weak. This is due to persistent inflation in advanced economies and geopolitical tensions amongst the major regional powers," he said.

"As a result, our employment growth is likely going to be lumpy and uneven across sectors."

MOM said aviation, tourism and consumer-facing sectors could benefit from the recovery in air travel, but outward-oriented sectors like manufacturing and finance may have it worse because of the external economic environment. 

Despite the drop in resident employment, total employment grew for the seventh consecutive quarter as 25,500 non-residents were hired. 

Almost half of these non-residents work in the construction sector, an MOM spokesperson said. Other sectors are still backfilling positions vacated by non-residents during the pandemic.

The increase in total employment is smaller in the second quarter compared with the first quarter.

WEAKER OUTLOOK

The unemployment rate remained low in the second quarter, but is likely to climb slightly in the coming months, MOM said.

In July, the first month of the third quarter, overall unemployment increased to 2 per cent, up from 1.9 per cent in June.

There are also signs that labour demand is cooling.

Job vacancies declined for the fifth quarter in a row, to 87,900 in June. As a result, the ratio of job vacancies to unemployed persons dipped to 1.94, from 2.28 in March.

“Given the weak external environment and economic growth for the rest of the year, labour demand could ease further and be uneven across industries,” MOM said.

Job vacancies hit a record of 126,000 in March 2022. “(At that time) basically everybody was saying that the market was overheating, overly tight. Businesses were saying that they don’t have enough, there was a worry about a shortage of manpower,” said MOM’s Mr Ang.

Vacancies can be said to be reaching a more reasonable level now, he said, adding that before the pandemic, the figure ranged between 50,000 and 60,000.

An MOM poll also revealed that in June 2023, only 58.2 per cent of firms had plans to hire in the next three months, down from 64.8 per cent in March.

Retrenchments declined in the second quarter after rising for three quarters, with reorganisation or restructuring being the main reason cited.

The layoffs were driven by the information and communications sector, but the likelihood of residents in this industry finding new jobs remained high at 69.2 per cent.

Mr Ang noted that retrenchments are not widespread across different industries, which is usually the case during crisis periods. 

Dr Tan said he is not so worried about the retrenchments, and that restructuring can strengthen an organisation. 

"That churn may not necessarily be bad, and net-net, there's still a shortage," he said. CNA