Unemployment rate up despite strong job growth

Office workers commmute during the morning rush hour in Singapore's central business district, on Friday, Dec. 16, 2011. Unemployment rose to 2.1 per cent and more workers lost their jobs in the second quarter of the year, even as employment growth s
Office workers commmute during the morning rush hour in Singapore's central business district, on Friday, Dec. 16, 2011. Unemployment rose to 2.1 per cent and more workers lost their jobs in the second quarter of the year, even as employment growth stayed strong, according to a Manpower Ministry (MOM) report released yesterday. -- FILE PHOTO: BLOOMBERG

Unemployment rose to 2.1 per cent and more workers lost their jobs in the second quarter of the year, even as employment growth stayed strong, according to a Manpower Ministry (MOM) report released yesterday.

Economists said the labour market remains tight - perhaps even too tight, with Acting Manpower Minister Tan Chuan-Jin stressing the need for job growth to slow.

In a Facebook post, he wrote: "We need to moderate employment growth to a more sustainable pace, and encourage companies to move towards manpower-lean growth."

Employment grew by 32,500 in the second quarter - more than in the quarter before (28,900) and the same period last year (31,700).

This brought total employment to 3.4 million in June, 4per cent up from a year ago.

That growth rate is more than double the Government's target of 1 to 2 per cent for the decade, noted Mr Tan. "As you can see, our businesses are still relying too heavily on labour."

Yet unemployment also rose. The seasonally adjusted unemployment rate was 2.1 per cent in June, up from 1.9 per cent in March.

The resident unemployment rate rose to 3 per cent from 2.9 per cent before, and the citizen unemployment rate to 3.1per cent from 2.9 per cent before.

Layoffs also went up. There were 2,900 workers losing their jobs, higher than in the quarter before and the same period last year.

In its report, MOM said that the tight labour market showed signs of easing as layoffs rose.

But experts disagreed, pointing to different labour market conditions across economic sectors.

"A rise in unemployment in certain sectors does not translate to an easing in the labour market in other sectors," said Mr Mark Hall, vice-president and country general manager of recruitment firm Kelly Services.

Services drove the rise in employment growth (21,700), with manufacturing and construction seeing slower growth instead.

Layoffs also fell in services, and job losses were instead led by manufacturing.

This mismatch in demand and supply across sectors means that the labour market is tight even though unemployment rose, said Barclays economist Joey Chew.

In his Facebook post, Mr Tan said more redundancies can be expected as Singapore's economy restructures. Job creation, training and job matching will thus be important, he added.

On restructuring, UniSIM economist Randolph Tan worried that strong employment growth might hamper productivity. He said the only good news is that the second quarter's high GDP growth - 3.7 per cent - should still mean an improvement in productivity.

janiceh@sph.com.sg