SINGAPORE - The labour market has not quite turned the corner despite showing signs of recovery, cautioned analysts.
They were responding to official data released by the Ministry of Manpower on Wednesday (Dec 13), which indicated a slight decline in the unemployment rate for Singaporeans after accounting for seasonal variations, and a dip in retrenchments.
The unemployment rate for Singaporeans was 3.2 per cent in September, down from 3.3 per cent in June, while the number of layoffs in the third quarter was 3,400, down from 3,640 in the previous quarter.
Companies are not investing and hiring as aggressively as they did in past economic cycles, as restructuring and a stricter foreign worker policy has "thrown a spanner into Singapore's labour market", observed Maybank Kim Eng economist Chua Hak Bin.
This runs counter to the quick turnaround in labour market conditions seen in past economic recoveries, when companies usually hired and invested aggressively amid strengthening economic growth.
For example, employment levels surpassed pre-crisis levels within two quarters after Singapore emerged in mid-2009 from a recession.
The Ministry of Trade and Industry has recently upgraded Singapore's growth forecast for 2017 to 3 per cent to 3.5 per cent.
Despite this positive outlook, Dr Chua and Singapore University of Social Sciences economist Walter Theseira said businesses may not be fully confident that growth in their sectors is on a upward trajectory for the long haul.
"They may not be willing to expand their headcounts if sustained growth is not coming from their sector, and may choose to cope with demand by offering overtime and other incentives to existing workers instead," said Dr Theseira.
The economic outlook for this year was raised primarily due to the manufacturing boom, said CIMB Private Banking economist Song Seng Wun. But growth remains uneven in other sectors, he added.
Technological disruption has seen some sectors like retail continue to shed workers, said Mr Song, who pointed out that even the boost in manufacturing has not seen a growth in employment in the sector as of the third quarter of this year.
This is because the manufacturing sector generally tends to be more capital-intensive, and depends more on technology than labour.
Manufacturing saw a decline in employment this year, with 10,100 workers shed in the first three quarters compared to 8,900 in the same period a year ago.
Employment in construction also fell for the fifth consecutive quarter. In all, 9,500 workers were shed in the third quarter, bringing the total in the first nine months of the year to 32,600 workers.
However, the service sector saw employment growing by 26,200 in the first three quarters this year, the bulk of which came from community, social and personal services; administrative and support services; financial services and information & communication.
Correction note: In an earlier version of the article, we mistakenly said that the number of layoffs in the third quarter was 3,640, down from 3,400 in the previous quarter. The article has been updated with the correct data. We are sorry for the error.