Job market continues recovery in Q2; global headwinds such as inflation can dampen demand

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SINGAPORE - Singapore's job market continued its recovery in the second quarter of this year but global headwinds, such as rising inflation, the Russian-Ukraine conflict and a resurgence of Covid-19 infections in major economies including China, may dampen labour demand.

Resident employment - Singaporeans and permanent residents - has surpassed pre-pandemic levels by around 4 per cent since December last year and will likely see subdued growth due to the improving unemployment situation, according to advance estimates released by the Ministry of Manpower (MOM). 

"Going forward, we expect non-resident employment to continue growing at a robust pace as it catches up to its pre-Covid-19 level," said the ministry on Friday (July 29). Non-resident employment, based on latest estimates, remains about 10 per cent lower than 2019 levels.

For the second quarter, total employment - excluding migrant domestic workers - expanded by 64,400 or 1.9 per cent.

Driving this growth was the services sector, which saw 27,300 employed, closely followed by 25,200 in construction and 12,200 in manufacturing.

Total employment grew at a faster pace than the first quarter’s 42,000 or 1.2 per cent.

Non-residents, particularly in construction and manufacturing, drove the increase as employers in these sectors hired to fill a backlog of vacancies and meet rising demand after border restrictions were eased further since April, said MOM.

Its report found that more residents found employment, especially in growth sectors such as information and communications, professional services, and financial services.

Meanwhile, retrenchments declined to around 1,000 for the second quarter, rewriting the record low of 1,320 set in the first quarter.

The services sector accounted for the bulk of the retrenchments with about 700 workers laid off, followed by 200 in manufacturing and 100 in construction.

"As with recent quarters, business reorganisation or restructuring remained the top reason for layoffs," said MOM.

This comes amid high-profile layoffs at technology and cryptocurrency firms, including Tesla, Shopee, Coinbase and Crypto.com last month.

Meanwhile, unemployment rates, which peaked in October 2020, held steady after reaching pre-Covid-19 levels in February this year, amid a tight labour market and a record number of job vacancies available.

Last month, the overall unemployment rate was 2.1 per cent, down from 2.2 per cent in May. The resident unemployment rate fell to 2.9 per cent, from 3 per cent, while that for citizens remained at 3.1 per cent.

In its report, MOM said hiring is expected to remain strong in the coming months, as the proportion of companies that indicated they will increase manpower in the next three months continued to rise by 1.5 percentage points in June, compared with March.

But it added: “(Wage) pressures could ease, as fewer firms (28 per cent) in June 2022 indicated that they were thinking of increasing the wages of their employees, compared with March (31 per cent).”

More details, including the breakdown of resident and non-resident employment, sectoral breakdowns and re-entry rates among retrenched residents, on the labour market in the second quarter will be released in September.

Remarking on the report at the sidelines of a visit to an events management firm, Minister for Manpower Tan See Leng said on Friday that total employment is 99 per cent of what it was in 2019, underscoring the strong recovery.

He also noted that non-resident employment is set to increase at a faster pace as non-resident workers in construction, manufacturing and some process sectors return to fill up vacancies.

The fillip that relaxed restrictions have given to small and medium-sized enterprises, especially in hospitality, exceeded expectations, he said.

He added: “They are experiencing an even higher demand and supply, an even higher surge, compared with official estimates... they want to ramp up their hiring.

“But there are many traditional sectors that the resident workforce cannot fill adequately - this is what’s going to drive the increase.”

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Mr Richard Bradshaw, managing director for Asia at executive search firm Ethos BeathChapman, said that the high number of hires in the growth sectors reflects the high number of vacancies that employers are trying to fill.

Positions in these sectors that have been the hardest to fill include sustainability experts, which demand skill sets that remain scarce in the market.

He added that employers are increasingly retaining talent by redeploying them to new positions within the company, adding to the crunch.

“A lot of talent that would have moved have now been retained, stopping people from joining the labour market.”

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