Employment rate up for residents, but income growth slows

The resident employment rate was slightly higher in June this year compared with the same month last year despite economic headwinds, according to an advance labour force report out yesterday.

Additionally, workers' income continued to grow over 2019 but at a slower pace than a year ago, said the report from the Ministry of Manpower (MOM).

These figures come amid a year of economic uncertainties, with the escalation of the US-China trade war. Singapore's gross domestic product growth stood at 0.2 per cent in the second quarter of this year and initially sparked fears of a technical recession.

The ministry's latest report showed that the employment rate for residents aged 25 to 64 rose from 80.3 per cent in June last year to 80.8 per cent in June this year.

The top four sectors that hired workers were community, social and personal services, professional services, information and communications, and financial and insurance services.

Manpower Minister Josephine Teo said during a media briefing: "In spite of economic headwinds, we still see companies hiring workers... Even in sectors such as manufacturing that have been affected by the uncertainties, we still find about 6,000 vacancies among companies in June this year."

She added that companies can also take the opportunity to build themselves up in this slower phase of growth, by investing in building up productivity and looking at innovation, for instance.

MOM noted that the employment rate for residents aged 65 and above also rose, from 26.8 per cent in June last year to 27.6 per cent this year.

Maybank Kim Eng senior economist Chua Hak Bin said: "Employment has been driven by sectors less impacted by the trade war - which has hurt manufacturing and trade-related services.

"The Government's push to encourage higher female participation and strengthen the employability of older workers is helping to increase employment."

Singapore University of Social Sciences associate professor of economics Walter Theseira said the rise in the employment rate is primarily from people entering the labour force or staying in it.

"Economic uncertainty likely ties in through workers choosing not to give up their jobs to leave the labour market, perhaps viewed as too risky in case they cannot find work or don't have enough money to retire on.

"The push factor isn't too strong yet - that is, despite uncertainty, we don't really see employers actively seeking to shed workers, although they may be more cautious in hiring."

The real median income of full-time employed residents, which includes employers' Central Provident Fund contributions, grew by 2.2 per cent over the year to June, according to preliminary data. This is lower than the 4.4 per cent growth in the preceding year.

However, wage growth in the last five years from 2014 is higher than that in the preceding five years before 2014.

Real median income growth stands at 3.8 per cent per annum from 2014 to this year, compared with the 1.9 per cent per annum in the five years before that.

Efforts to boost low-wage workers also helped, with income at the 20th percentile also rising more since 2014 than in the preceding five years before that.

Mrs Teo said: "It is still encouraging that we are in positive territory but we have to work very hard to ensure companies... find opportunities so they can grow and, over time, raise salaries."

Economists added that the labour market is likely to remain soft going forward, while the ministry said it will closely monitor the situation and stand ready to step up employment support.

CIMB Private Banking economist Song Seng Wun said: "Recent statistics suggest a bottoming out as far as manufacturing is concerned... so we hope that slow growth recovery is under way, which means the current soft labour market conditions may persist. Much depends on whether consumer and business confidence recovers strongly."

Said MOM: "We encourage employers to work with tripartite partners to train workers with skill gaps.

"We also encourage job seekers to be open to opportunities in other sectors... beyond what they are familiar with."