Job market shows signs of ‘slowing momentum’ as retrenchment rises

The number of retrenchments rose to 1,600 in third quarter, almost double the previous quarter’s all-time low of 830. ST PHOTO: KUA CHEE SIONG

SINGAPORE - Employment continued to rise in the third quarter, but Singapore’s job market recovery showed signs of a “slowing momentum”, the Ministry of Manpower (MOM) said on Friday, as retrenchments swung up and the unemployment rate climbed.

In advance estimates for the quarter, MOM said total employment – excluding migrant domestic workers – rose 75,600 from the previous quarter.

But there was a “slight uptick” in unemployment rates and an increase in retrenchments, though both indicators were still on a par with or below pre-Covid-19 levels.

“The nation’s transition to living with Covid-19, along with the progressive removal of safe management measures and border restrictions, has supported the labour market’s recovery in recent quarters, though there are signs of a slowing momentum,” said MOM.

“In the coming months, a deteriorating global economic environment, higher global inflation as well as geopolitical tensions will impact the labour market,” it said.

The number of retrenchments rose to 1,600 in the third quarter, almost double the previous quarter’s all-time low of 830. Of these, 1,100 were in the services sector and 500 in manufacturing.

Retrenchments in services primarily arose from firms’ reorganisation or restructuring. Those in manufacturing mainly resulted from the discontinuation of product lines amid a global slowdown in manufacturing, MOM said.

“Firms may also be restructuring business operations and laying off employees in anticipation of a weakened global economy, against the backdrop of high inflation, tighter central bank monetary policies and geopolitical uncertainties,” it said.

None, or a negligible number, were retrenched in the construction sector.

However, the ministry said unemployment rates remained within the pre-Covid-19 range, while retrenchment figures were a step down from levels before the pandemic, based on quarterly averages for 2018 and 2019.

It also said there are some early indications that the rate of growth in employment is slowing amid lower economic growth.

This, even as the 75,600 figure outstrips the growth of 66,500 in the previous quarter and is the highest since at least 1991, based on MOM data.

Non-residents accounted for most of the expansion, as their employment continued its rebound towards its pre-Covid-19 level, especially in construction and manufacturing, as those workers make up a larger share of both sectors.

The ministry added that more residents – comprising Singaporeans and permanent residents – found employment, but the pace of increase eased compared with the previous quarter.

“Resident employment increases were mainly in outward-oriented sectors such as information and communications, professional services, and financial services.”

According to the report, employment growth in construction increased by over 20 per cent to 30,500, from 25,200 the previous quarter – outpacing the increase in growth seen between the first and second quarters of 2022.

But employment growth in manufacturing declined modestly to 12,100, from 12,400 the previous quarter.

The pace of growth in the services sector also declined between the second and third quarters of 2022, compared with between the first and second quarters.

Meanwhile, unemployment rates edged up slightly in September to 2 per cent overall – 2.9 per cent for residents and 3.1 per cent for Singaporeans – from a six-year low in August. Over the quarter, the number of unemployed residents rose from 69,300 in June to 70,900 in September.

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MOM also said that non-resident employment is expected to continue to recover, as employers backfill their vacancies.

The number retrenched is likely to continue rising, with external shocks such as the Russia-Ukraine war, rising interest rates and China’s economic slowdown weakening the global economy, said National University of Singapore labour economist Kelvin Seah.

Mr Nilay Khandelwal, managing director of Michael Page Singapore, chalked up the slowing pace of hiring growth to companies favouring keeping labour costs constant as they begin to set their 2023 budgets amid the unclear economic outlook.

“Firms remain cautiously optimistic, that the uncertainty is hopefully a short tide against the overall current, due to borders reopening and deals happening in Singapore and South-east Asia.”

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