Retrenchments fall in Q3 as unemployment edges up

The unemployment rate for residents and citizens held steady, although overall unemployment edged up from 2 per cent to 2.1 per cent. With the tight domestic labour market, it is unlikely that overall unemployment will climb much further, barring a s
The unemployment rate for residents and citizens held steady, although overall unemployment edged up from 2 per cent to 2.1 per cent. With the tight domestic labour market, it is unlikely that overall unemployment will climb much further, barring a sharp downturn next year, says OCBC's Ms Selena Ling.PHOTO: BLOOMBERG

Labour market continues to improve as total employment growth more than doubles

Fewer people were laid off in the third quarter of this year, while overall unemployment crept up slightly.

But as a whole, the labour market continued to improve, with total employment growth more than doubling in this period, said the Ministry of Manpower (MOM) yesterday.

Separately, the Monetary Authority of Singapore (MAS) said in its half-yearly macroeconomic review yesterday that job vacancies and hiring outlook surveys suggest that labour demand will rise further - especially in modern services.

Wage growth is also expected to strengthen compared with last year, the central bank added.

According to MOM preliminary figures, there were 2,500 retrenchments in the third quarter, fewer than the 3,030 in the quarter before.

The unemployment rate for residents and citizens also held steady, although overall unemployment edged up from 2 per cent to 2.1 per cent.

"Given the growth in employment, the slightly elevated unemployment rates reflected the continued inflow of job seekers into the labour market," said the MOM.

OCBC Bank's head of treasury research and strategy Selena Ling said that with the tight domestic labour market, it is unlikely that overall unemployment will climb much further, barring a sharp downturn next year.

"The key question is whether a prolonged (US-China) trade war will continue to weigh on trade and growth in 2019," she said.

In such a scenario, said Ms Ling, businesses may delay or cancel hiring plans, while consumers may tighten spending.

Meanwhile, total employment growth, excluding foreign domestic workers, was 15,200, up from 6,500 in the second quarter.

This expansion was broad-based, with increases seen across sectors including manufacturing, where the rise comes after 15 consecutive quarters of decline.

The service industry also logged gains such as in professional services, information and communications, and financial and insurance.

Although employment in construction continued to decline, this took place at a slower pace, said the MOM.

Job opportunities continue to be available in sectors such as finance and insurance, and healthcare.

But MOM added that as the labour market begins to tighten, employers may face greater challenges filling vacancies.

Yesterday, MAS flagged that some mismatches in the labour market may take time to resolve. It said: "A closer look at unemployed residents... shows that the increase in recent years was concentrated among professionals and managers and administrators, who might have found it more difficult to make career transitions."

In a post on Facebook, National Trades Union Congress assistant secretary-general Patrick Tay said: "In (the) light of ongoing economic restructuring, we must be prepared that the structural challenges, in the form of jobs and skills mismatches, will remain as key challenges."

A version of this article appeared in the print edition of The Straits Times on October 27, 2018, with the headline 'Retrenchments fall in Q3 as unemployment edges up'. Print Edition | Subscribe