SINGAPORE - The general consensus among experts is that generous wage subsidies and hiring incentives from the Government helped to cushion the impact of the pandemic on the job market last year.
But they also agree that challenges still abound for longer-term recovery.
The latest quarterly labour market data estimates for the fourth quarter of last year showed a slight increase in resident employment to reach pre-Covid-19 levels by the end of 2020.
This suggests that the domestic labour market is starting to stabilise, said OCBC Bank's chief economist Selena Ling, though she cautioned that Singapore is not completely out of the woods yet.
"The unprecedented policy support, particularly the Jobs Support Scheme, has helped stave off some of the economic fallout from the Covid pandemic," said Ms Ling, who is head of treasury research and strategy.
"But looking ahead to the rest of this year, it is very much a race against time for the vaccination roll-out both globally and locally since there are emerging new virus strains," she added.
Maybank Kim Eng senior economist Chua Hak Bin echoed Ms Ling.
"Generous wage subsidies and hiring incentives have cushioned the impact of the pandemic and lockdown on local employment," said Mr Chua.
Foreigners, on the other hand, bore the brunt of retrenchments and downsizing in the pandemic recession, he added.
But overall jobs recovery will likely remain weak, as border controls and stricter foreign worker measures will make it harder for firms to hire non-residents and companies will likely face skills mismatches in hiring from the resident pool, especially in the growing tech and digital segments.
Another challenge will also come from sustaining prevailing government measures to keep locals in jobs, such as the SGUnited Jobs and Skills Package, said Barclays Bank regional economist Brian Tan.
"These are going to take a bit of headwind out of the recovery of the labour market, but the reality is that it is going to be difficult to sustain these programmes at the same level of intensity for a long period of time," said Mr Tan.
He also noted that the unemployment rate for December 2020 being higher than that in the same month the previous year shows that the labour market is probably not yet able to create enough jobs for new entrants.
"Eventually, it is not good enough for the labour market to simply replace jobs that are lost, but it will also need to accommodate the needs of a growing labour force," said Mr Tan.
DBS senior economist Irvin Seah agreed, noting that many of the SGUnited traineeships are on a temporary basis.
"If at the end of the programme, these trainees are not converted to permanent employees, and we have a new batch of graduates joining the workforce, this suggests increased competition later on," he said.
"We have not seen a more pronounced recovery in the labour market, we've only seen the bottom. So for the most part of this year, the employment landscape will remain very challenging," he added.
Ms Ling said the domestic labour market will likely see a more U-shaped recovery, unlike the growth trajectory of Singapore's gross domestic product, which appears to be more V-shaped.
"The silver lining is that resident employment has recovered to pre-Covid levels, but the drag is on the non-resident side," she said.
In a Facebook post on Thursday (Jan 28), National Trades Union Congress (NTUC) assistant secretary-general Desmond Choo said the labour estimates show that efforts to save jobs and encourage hiring had paid off.
"This is only possible when employers and workers agree on cost-saving arrangements to help business tide through this crisis, such as accepting wage reductions, organising the redeployment of workers and tapping on various training grants," said Mr Choo.
But Singapore is not out of the woods yet, he added, noting that recovery will depend on "stemming the spread of Covid-19 through the fast, effective deployment of vaccines".
In the meantime, NTUC will continue to build up the skills and capabilities of workers, he said, urging companies to utilise NTUC's Operation & Technology Roadmap tool and set up training committees to transform their business.