News analysis

After a choppy 2016, the year ahead probably won't be any smoother

Office crowd in Central Business District (CBD). PHOTO: ST FILE

The preliminary job numbers for 2016 released yesterday were telling - and closely watched.

The first nine months of the year set the stage, with unemployment inching up and job growth slowing. In fact, in the July to September quarter, the total number of people employed in Singapore actually fell.

Yesterday's report for the full year was supposed to tell us just how soft the job market was in 2016, and indicate how it might shape up this year.

The good news first.

The economy may be slowing, but not to the extent of whittling down the number of people who hold jobs.

More people were employed in the fourth quarter of last year - 1,900 more to be precise - compared with the quarter before.

For the whole of last year, there were 16,400 more people holding a job in Singapore, compared with 2015. Of these, 10,700 were locals and 5,700 were foreigners.

But employment did not increase across the board.

In fact, it increased only in the service sector, which saw 43,800 more workers employed last year.

The manufacturing sector shrank by 15,700 workers last year, while the construction sector employed 11,300 fewer people. The manufacturing sector has been shrinking since 2014.

On the salary front, there was some relief for Singaporean workers.

The median income of citizens working full-time rose 0.7 per cent to $3,823 last year, up from $3,798 in 2015.

After taking into account negative inflation or the lower cost of living, the increase was even higher at 1.3 per cent.

One point that the Ministry of Manpower (MOM) took pains to underline in yesterday's report was that the incomes of the bottom quintile of Singaporean workers - the lowest-earning 20 per cent - rose from $1,617 in 2011 to $2,021 last year.

The good news did not extend to foreign workers, who had it rough last year. Foreign employment - the number of foreigners in jobs - fell by 2,500 last year. The number excludes maids. The jobs were shed mainly by the construction and marine sectors.

It was the first time since 2009 that foreign employment fell. That year, at the height of the global financial crisis, Singapore ended up shrinking its foreign workforce, excluding maids, by 8,900.

This is a sign of what foreigners working here can expect. As the economy slows, they will be the first to bear the brunt of job losses.

The bad news is that the tidings for this year are not very cheering.

MOM itself is not in the habit of predicting what the future holds, but analysts are somewhat downbeat.

For last year, the unemployment rate - which tracks the proportion of workers who are willing and able to work but cannot find jobs - was 2.1 per cent. This was the highest since 2010, and up from 1.9 per cent in 2015.

This year could be rougher, as OCBC Bank's head of research and strategy Selena Ling says that the overall unemployment rate could hit 2.5 per cent.

Even citizen unemployment - at 3.1 per cent last year - was the highest since 2010.

Total employment grew by 16,400 last year, but the growth was the lowest since 2003. It grew even less than during the 2009 global financial crisis.

Even the 1.3 per cent increase in real median income last year was a sharp dip from the 7 per cent increase the year before.

Redundancies - where excess workers were laid off through retrenchment or early termination of contracts - have been rising since 2011, and hit a six-year high of 19,000 last year.

Yesterday's preliminary data did not shed light on questions like how many of the laid-off workers were locals and how many were professionals, managers and executives.

The answers should come in the next few months as MOM crunches and releases more data.

Even so, some signs are clear.

The bright spots - like rising incomes and more locals in jobs - are starting to dim.

It is going to be a choppier ride in the job market.

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A version of this article appeared in the print edition of The Straits Times on January 27, 2017, with the headline After a choppy 2016, the year ahead probably won't be any smoother. Subscribe