Singapore’s resident unemployment rate hits 4.5% in August — highest in more than a decade

• Resident unemployment rate rose 0.4 percentage points in August
• The overall jobless rate rose to 3.4 per cent — higher than the peak of 3.3 per cent in the wake of the 2009 financial crisis 
• Deputy Prime Minister Heng Swee Keat said the Government is looking at ways to deal with the situation 

SINGAPORE — The unemployment rate for citizens and permanent residents (PRs) rose at a slightly faster pace in August than the month before, Manpower Minister Josephine Teo said, warning that it remains to be seen if joblessness will rise more quickly in the coming months.

The Ministry of Manpower’s (MOM) eighth weekly job situation report released on Wednesday (Oct 7) showed that the unemployment rate for residents — citizens and PRs — climbed 0.4 percentage points in August to 4.5 per cent, the highest since September 2009 (4.9 per cent) in the aftermath of the global financial crisis. 

The climb is a touch steeper than in July, when the resident jobless rate rose by 0.3 percentage points to 4.1 per cent. 

Mrs Teo briefed the media on the report before she toured construction firm Samwoh Corporation’s laboratory facilities with Deputy Prime Minister Heng Swee Keat and Trade and Industry Minister Chan Chun Sing.

Singapore’s overall unemployment rate, which covers citizens and PRs as well as foreigners living in households here, stood at 3.4 per cent in August.

This is higher than the peak of 3.3 per cent recorded in the wake of the financial downturn in September 2009, but lower than the 4.8 per cent jobless rate in September 2003 in the aftermath of the severe acute respiratory syndrome outbreak. 

Historically, the labour market has tended to lag economic performance by two or three quarters.

In July this year, the overall unemployment rate was 3 per cent. 

Between July and August, the jobless rate for citizens also increased from 4.3 per cent to 4.6 per cent — the highest since September 2009 (4.9 per cent). 

SHARP ECONOMIC SHOCK 

Speaking to reporters after the tour, Mr Heng was asked if the rising resident unemployment rate was cause for concern and if it could indicate that there was structural unemployment. 

Structural unemployment is a form of involuntary unemployment caused by a mismatch between the skills that workers in the economy can offer and the skills demanded of workers by employers.

Mr Heng replied: “At the moment, what we are faced with is a very sharp cyclical shock, and not just in Singapore but around the entire world. 

“The Jobs Support Scheme and all the various support schemes take us into March next year. So there will be some degree of structural unemployment that ensues, but a lot of it now is also cyclical shock of a very deep nature,” he said.

He added that there would also be some frictional unemployment and the Government is looking at how it can deal with the situation holistically.

Frictional unemployment is when workers become voluntarily unemployed while looking for a better job, for instance.

Weighing in on the unemployment situation, Mrs Teo noted the uncertainties roiling the jobs market. 

“We cannot tell at this point in time whether, in the coming months, the unemployment rate will (rise) at a faster rate or will it stay about the same, but nonetheless, we are keeping a very close watch.” 

The minister was asked whether the resident unemployment rate could rise further when government initiatives such as the Jobs Support Scheme come to an end. 

The Government announced in August that the scheme, which provides employers with wage support to retain Singapore employees, would be extended by up to seven months. 

In response, the minister reiterated that it was hard to foretell the future. 

“What we can do, however, is to make sure that even the opportunities that are currently available, they continue to be filled as quickly as possible,” she said. 

MOM’s latest job situation report showed that there remains a significant number of unfilled vacancies under the SGUnited Jobs and Skills Package. The S$2 billion package aimed to create close to 100,000 opportunities for workers, including jobs, traineeships and skills training opportunities.

Although it has surpassed this target — there were 117,500 opportunities at the end of August — only 33,100 jobseekers have been placed into openings under the scheme so far. 

Mrs Teo noted that the Monetary Authority of Singapore has estimated that the Budgets rolled out this year — totalling nearly S$100 billion — will prevent Singapore’s economy from contracting by a further 5.6 per cent in gross domestic product in 2020 and 4.8 per cent in 2021. 

The Government’s economic measures are also expected to offset some of the rise in the resident unemployment rate by about 1.7 per cent this year. 

“All these support measures, in totality, could be helping to prevent 155,000 people from losing their jobs,” Mrs Teo said.