Budget 2016: Retrain amid restructuring

After years of solid job creation, rising job vacancies and low unemployment, the labour market has become slightly wobbly.

Last year, more than 15,000 workers were made redundant, the most since the 2009 recession. Experts expect that this could get worse as the economy braces itself for a year of weaker growth, expected to be between 1 per cent and 3 per cent.

Unsurprisingly, workers are getting worried about their job prospects. About a third of the feedback sent to government agency Reach had to do with job security and the slowing economy, making it the top concern among Singaporeans this year.

When Finance Minister Heng Swee Keat delivers the Budget tomorrow, some expect he will do something to address the employment situation.

Chances are, however, there is unlikely much to be done. First, unemployment remains low, at about 3 per cent at the end of last year, despite the higher number of layoffs. Wages for Singaporeans grew strongly last year, at about 7 per cent in real terms.

Second, the Government probably wants to keep its fiscal powder dry on the off-chance that the economy takes a serious turn for the worse.

In other words, things are not so dire that they require direct intervention, yet.

What bears closer watching is the structural, longer-term unemployment that may start to creep up as the economy restructures. There is evidence of this happening. For instance, some bank operations are being outsourced or replaced by technology.

So far, the long-term unemployment rate has been low and steady, hovering at about 0.6 per cent. But a rise in the number could indicate that there is a growing mismatch of workers to jobs.

The solution, then, has to be to find ways to retrain workers to make them employable in sectors that need them. For instance, additive manufacturing is a growth sector needing people with specialised skills.

How exactly this can be done is something Mr Heng should address in the Budget, which many workers will be following closely.

A version of this article appeared in the print edition of The Straits Times on March 23, 2016, with the headline 'Retrain amid restructuring'. Print Edition | Subscribe