News analysis

Two-track labour market emerging

The latest official figures released yesterday paint a gloomy picture and reflect a worrying situation: The emergence of a two-track labour market.

On one track are the jobless who face an uphill task in finding work. On the other track are people with jobs that give them a steady rise in income.

The growing divide between these two groups is becoming noticeable, and gives cause for concern.

Track one: Local unemployment rose last year. There were more local workers - Singaporeans and permanent residents - who want to work but could not find work. Last year's 3 per cent resident unemployment rate is the highest since 2010, when Singapore was hit by the global financial crisis.

Also, there were fewer jobs for the bigger pool of unemployed. For every 100 unemployed last December, there were only 77 vacancies, down from 91 three months earlier. This job vacancy ratio of 0.77 is the lowest since September 2009, when the global financial crisis resulted in a ratio of 0.54, meaning every 100 jobless were chasing 54 jobs.

Put both together - higher unemployment and fewer jobs - and it shows out-of-work locals are taking longer to return to the job market.

For every 100 jobless locals last year, 26 had no job for 25 weeks or more, up from 21 in 2015.

Worse, the proportion of these long-term unemployed rose last year to the highest since 2004. The hardest hit were degree holders and those aged 50 and older.

The Ministry of Manpower (MOM) has this assessment: "The labour market weakened in 2016, reflecting subdued conditions in several segments of the economy." On the outlook for this year, MOM "expects labour demand to remain modest".

The assessment does not mask the starkness of the bad news for those out of work. This is a bad time to be without a job.

Track two: Those on the payroll of employers fared well last year.

The median monthly income of Singaporeans holding full-time jobs rose 0.7 per cent from $3,798 in 2015 to $3,823. After adjusting for the lower costs of living last year, the rise is steeper, at 1.3 per cent.

Workers were also more productive last year. Labour productivity inched up by about 1 per cent, reversing declines in 2014 and 2015.

But even as unemployment rose, so did employment. Employers added 11,200 more local workers to their payrolls last year.

This may seem contradictory at first glance, but what happened was that the growth in the number of jobs could not keep up with the growth in the workforce. So even as more local workers found jobs, even more could not find work.

This gives a hint on what is needed to fix the problem of the tepid labour market - job creation.

It is the key solution - and the only solution.

Those with jobs are faring well. They earn more and are more productive. The same cannot be said for the unemployed.

But there will always be people with and without work, regardless of the state of the economy. This is also the reason economists regard full employment as the state where all eligible people who want to work can find work at prevailing wage rates. Full employment does not mean zero unemployment.

But what would be most worrying is when the lives of employed workers improve while the jobless sink into debt and depression. This is the "jobs divide", and there are signs of it happening here.

Government measures, however, are in place to prevent it from taking root. This month, MOM announced measures to help the long-term unemployed and mature workers. These include more subsidies for training, job trials and more salary support for employers who hire them.

There are also moves to help jobless workers switch careers. The Ministry of Health last week said it would spend $24 million to help mid-career workers switch and fill the 9,000 jobs being created in the public healthcare and community care sectors in the next three years.

These moves will not solve the problems of unemployed workers overnight, or even in the near term. But they give them a better shot at going back to work and riding out the economic uncertainties.

They also ensure the "jobs divide" does not add to pressures that can divide society.

A version of this article appeared in the print edition of The Straits Times on March 16, 2017, with the headline 'Two-track labour market emerging'. Print Edition | Subscribe