Business sentiments improving as economy mends

About 73 per cent of companies polled by the Ministry of Manpower (MOM) last month said they intended to hire in the next two months, amid business sentiments becoming relatively positive with the economy on the mend.

This is up from 65 per cent last December. Last June, the figure was about 52 per cent of companies polled, said MOM, citing ongoing company polls.

The proportion of companies intending to cut staff size also fell to 2.2 per cent, from 2.8 per cent last December.

Those that said they would reduce salaries rose to 3.4 per cent, from 2.8 per cent three months before.

The findings were published yesterday in MOM's report of preliminary estimates for the labour market in the first quarter of this year, which showed that the jobs situation has continued to recover.

The key indicators - total employment and unemployment rate - are expected to improve in the first quarter, according to estimates.

Retrenchments fell for the second consecutive quarter to pre-pandemic levels, down from the peak in the third quarter of last year.

The incidence of retrenchments also fell, from 2.8 workers retrenched per 1,000 employees in the fourth quarter of last year to 1.1 workers retrenched per 1,000 employees in the first quarter of this year.

But MOM cautioned that there may still be pockets of displacement, due to ongoing restructuring and reorganisation of businesses.

While the data shows broad-based recovery, the labour market is still not back to pre-Covid-19 conditions.

Manpower Minister Josephine Teo, who spoke to the media after visiting NTUC LearningHub in Bras Basah yesterday, said there will still be challenges from travel restrictions that affect the inflow of work pass holders, as well as from the changing profiles of jobs available as a result of business transformations.

But she also noted that with the travel restrictions, more employers are considering hiring local workers for positions that require new skills as a result of business restructuring.

She urged job seekers to pick up new skills so that they will be more attractive to prospective employers. Displaced workers can also tap the SGUnited Skills Programme, traineeships or Mid-Career Pathways programmes.

"There is no penalty towards the individual if, along the way, they find employment and decide to exit. So we'd like to encourage them to continue exploring these options offered through such schemes and know that the support is readily available to them to make full use of the time they have," said Mrs Teo.

Analysts told The Straits Times that while the latest MOM data is encouraging, it is unlikely that the labour market will recover to pre-pandemic levels this year.

OCBC Bank chief economist Selena Ling said that while businesses are gradually hiring again, they are more likely to be replacing displaced workers lost over the past 12 months, rather than aggressively expanding their workforce.

While sectors such as financial services are leading the recovery, small and medium-sized enterprises may still be cautious about hiring when existing support measures expire, she said.

Maybank Kim Eng senior economist Chua Hak Bin said total employment is unlikely to recover to pre-pandemic levels by year end, even though Singapore's gross domestic product will most likely be above pre-pandemic levels.

Mr Patrick Tay, assistant secretary-general of the National Trades Union Congress, said in a Facebook post yesterday: "Moving ahead, I think it's important to pay close attention to how the pandemic pans out the rest of the year, how our vaccination rates progress, how the tapering off of the Jobs Support Scheme come end-June will impact companies, and how air travel resumes."