Job mismatch a key worry in tackling unemployment: Experts

Economists interviewed yesterday had mixed views on the possibility of unemployment rising further.

Some see Singapore's labour market woes bottoming out in the later part of this year.

Others say that if Singapore cannot restructure its industries fast enough to remain competitive, there is a risk that a higher proportion of workers will be displaced.

They were commenting on Manpower Minister Lim Swee Say's message yesterday for May Day, in which he said unemployment rose last year and could continue to rise as the economy restructures.

He noted that the average unemployment rate for local workers last year rose to 3 per cent, after holding steady at about 2.8 per cent for four years.

But as of last month, the seasonally adjusted unemployment rate for local workers remained unchanged from last December while the overall unemployment rate edged up, preliminary data from the Manpower Ministry showed.

OCBC economist Selena Ling sees the overall unemployment rate starting to stabilise at around 2.5 per cent later this year, as some industries are benefiting from the upswing in external demand.

But expect improvements to be gradual, said DBS economist Irvin Seah, adding that the labour market is weighed down by structural challenges more than cyclical issues.

"The labour market will not respond as dynamically as the hard economic numbers because of the structural issue of job mismatches.

"It takes time to train people for new jobs," he said.

This structural issue worries Singapore University of Social Sciences labour economist Walter Theseira, who said unemployment rates may have been cushioned by foreigners being let go to cope with slow demand.

At some point, the buffer could fizzle out and unemployment for locals may rise. "There is a risk of permanently higher structural unemployment due to the maturing economy and increasing disruption," he said.

Some workers who lost their jobs may also have turned to gig economy jobs and remained out of the unemployment statistics so far, but it is unclear how sustainable those jobs are, he added.

"What is needed is structural change to allow our economy to service higher-value needs," he said.

Even that may not remove the risk to employment, he said.

For example, if a factory doing lower value-added work, such as producing disk drives, closes down, it is unclear whether a higher value-added factory can replace it and employ a similar number of people with similar skills.

Helping companies and workers remain relevant is also a concern of United Workers of Electronics and Electrical Industries general secretary Tan Richard.

"Nowadays, it's a very competitive world. If you don't move ahead of people, you will lose," he said.

His union is trying to link companies to grants so that they can bring in new technology and products as they restructure and continue to provide jobs.

"As orders come back, they can make some structural changes to processes before going full swing into production," he said.

Joanna Seow

A version of this article appeared in the print edition of The Straits Times on April 29, 2017, with the headline 'Job mismatch a key worry in tackling unemployment: Experts'. Print Edition | Subscribe