Singapore's local employment holds steady in Q1 but total employment plunges by the most since Sars period

People in the CBD on March 10, 2020. The decline in Q1 is due to a significant reduction in foreign employment.
People in the CBD on March 10, 2020. The decline in Q1 is due to a significant reduction in foreign employment.PHOTO: ST FILE

SINGAPORE - The number of people working in Singapore, excluding maids, plunged by 19,900 in the first three months of the year as the early impact of the Covid-19 pandemic disrupted economic activity.

The drop in employment was the sharpest quarterly contraction since the severe acute respiratory syndrome (Sars) outbreak, when employment fell by 24,000 in the second quarter of 2003.

But the decline last quarter was due to a significant reduction in foreign employment. Employment of locals – Singaporeans and permanent residents – still grew at a "modest pace", according to preliminary data released by the Ministry of Manpower (MOM) on Wednesday (April 29). 

Unemployment rates rose in March, compared with December, while retrenchments rose quarter on quarter as well, though both figures remained lower than the peaks seen during the global financial crisis in 2009.

The ministry did not provide a breakdown of the exact number of employment change for locals and foreigners, nor of retrenchments. Manpower Minister Josephine Teo said that this is because the data is still preliminary. Official figures for the first quarter are set to be released in June.

Mrs Teo said during a media briefing on Wednesday that the impact of Covid-19 restrictions was probably felt only from February onwards, whereas in January businesses were still active for the Chinese New Year period. 

The data also does not cover the "circuit breaker" period, which started on April 7, when businesses deemed non-essential had to close their workplaces, she said.

“Even though local employment is holding up for now, we are very mindful that companies may well have implemented measures cost cutting measures, in order to save jobs,” she said, adding that the ministry is monitoring the situation.

She noted that about a third of the extraordinary Budget measures have been focused on jobs and wage support, and that is contributing to keeping retrenchment and unemployment numbers down for now.

The seasonally-adjusted unemployment rate for Singaporeans rose to 3.5 per cent in March, up from 3.3 per cent in December. 

The rate was 3.3 per cent for locals up from 3.2 per cent, while the overall rate was 2.4 per cent, up from 2.3 per cent.

 
 

For comparison, the citizen, resident and overall unemployment rates hit highs of 6.4 per cent, 6.2 per cent and 4.8 per cent respectively in September 2003, during the Sars period. 

In September 2009, during the global financial crisis, they were 4.9 per cent, 4.9 per cent and 3.3 per cent respectively.

As for retrenchments, the overall number of 3,000 workers affected in the first quarter of this year was higher than the 2,670 layoffs seen in the fourth quarter of last year, but lower than the quarterly peak of 12,760 in the first quarter of 2009.

More retail trade and food and beverage workers lost their jobs last quarter, compared with the previous quarter, as domestic consumption fell when safe distancing measures kicked in, said MOM. Accommodation workers were similarly affected as visitor arrivals fell.

This mirrors the sharp decline in the number of people employed in the services sector due to the impact of the virus outbreak on these three industries.

Meanwhile, employment still grew in the healthcare, public administration and professional services industries.

Mrs Teo said foreign employment saw a sharp fall in the first quarter partly because of the travel restrictions imposed to prevent imported cases of the virus. Some workers have still not returned to Singapore after having travelled home, as their companies may have asked them not to return at all, or the workers themselves may have decided not to do so.

Mrs Teo also said that her ministry has received about 3,000 notifications from companies implementing a range of cost-cutting measures. These measures affect about 100,000 members of the total workforce, or about 3 per cent, she said.

 
 
 

Employers which implement cost-saving measures during the “circuit breaker” period from April 7 to June 1 must notify the ministry if they have at least 10 employees and cut local workers’ gross monthly salaries by more than 25 per cent, or cut foreign workers’ basic monthly salaries by more than 25 per cent.

The MOM report also showed that more companies are considering cutting jobs as their business expectations deteriorate.

A total of 23 per cent of firms polled in the week of April 13 to 17 said they would or might reduce their head count over the next two months, up from 16 per cent of those polled from March 23 to 27.

Over the same period, the proportion which said they would or might reduce salaries also rose - to 29 per cent from 15 per cent.

“Labour market conditions are likely to worsen in the upcoming quarter, given the sharp fall in demand globally as well as in Singapore as firms adjust to circuit breaker measures,” said MOM.

The Monetary Authority of Singapore cautioned in its macroeconomic review released on Tuesday that firms from many sectors of the economy are likely to reduce labour costs via a combination of wage and headcount reductions as revenues shrink.

This comes as gross domestic product is expected to drop sharply in the second quarter, on the back of more stringent circuit breaker measures to contain the spread of the virus.

Singapore could see its worst recession in recent memory with the economy forecast to shrink by between 1 per cent and 4 per cent this year.

Among the measures announced in the Resilience Budget on March 26 to cushion the impact of the Covid-19 outbreak on workers was the SGUnited Jobs initiative, through which the Government will create some 10,000 temporary and permanent roles over the next one year.

 
 
 

Workforce Singapore chief executive Tan Choon Shian said during the media briefing on Wednesday that 13,000 jobs under the initiative have already been posted through two virtual career fairs and on the MyCareersFuture.sg portal, and 11,000 people have applied as of April 19. The jobs available range from manufacturing positions to healthcare and social services, and retail positions in supermarkets, he said.

Data on successful placements is not available yet as companies are still evaluating candidates, he added.

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