Risk of economic slowdown could dampen Singapore job market: MOM

This is the lowest level the unemployment rates have fallen to since March 2016. PHOTO: AFP

SINGAPORE - Although unemployment in Singapore dropped in August compared with July, the increasing risks of an economic slowdown may dampen the labour market.

Monthly figures for August, which were released by the Ministry of Manpower (MOM) on Friday, showed there were 57,600 unemployed Singaporeans in August, almost 4,000 fewer than July’s 61,500.

The unemployment rate for Singaporeans declined by 0.2 percentage point to 2.8 per cent. 

Resident unemployment – comprising permanent residents and Singaporeans – clocked in at 64,800, compared with 68,900 in July.

The overall unemployment rate, at 1.9 per cent, and that for residents, at 2.7 per cent, both posted a 0.2 percentage point decline from July too.

But MOM added: “While unemployment rates are currently lower than pre-pandemic levels, the increased risk of a slowdown amid contraction of manufacturing activity, soaring inflation and interest rate hikes could dampen labour market activity.”

The cautious note struck departs from the ministry’s optimism when releasing July’s figures on Sept 9.

It said then: “We expect unemployment rates to remain low in the coming months as sectors such as aviation ramp up recruitment efforts with the easing of border restrictions and rebound in travel.”

Human resources expert Mayank Parekh said sectors that are more at risk of dampened labour demand include financial services, wholesale trade between businesses, and manufacturing.

“This current uncertainty is causing companies to slow down or put on hold their hiring plans,” said Mr Parekh, who was previously chief executive of the Institute for Human Resource Professionals.

However, manufacturers are still unlikely to lay off workers amid a continuing labour crunch, he added.

Mr Parekh also said the ongoing, and faster-than-expected, rebound in travel means that aviation and travel-related sectors are likely to still see robust hiring.

Travel-related sectors, he said, include the events and entertainment industries.

As global travel resumes, domestic Covid-19 restrictions ease and demand for consumer-facing services rise in Singapore, a high hiring rate was seen in the aviation, food and beverage, and accommodation sectors, The Straits Times reported in September.

Despite the hiring spree, the vacancy rate remained high for some jobs in those sectors, according to MOM’s labour market report for the second quarter of 2022 released then, reflecting a broad-based labour crunch.

“I don’t expect our overall unemployment rates to be impacted as there is significant ramp-up in other sectors such as aviation and travel-related ones,” said Mr Parekh.

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