Singapore’s job market has taken a hit because of the global economic slowdown. However, as Singapore’s economy looks to stabilise and restructure, the job market will need to have significant adjustments.
The weak global economy and the country’s ongoing economic restructuring have slowed down employment in the island nation tremendously. Employment grew by a tiny 0.4% last year for a total of 16,400 jobs.
With Trump at the helm of the world’s largest economy and the continued economic slowdown in China, Selena Ling, head of Treasury research and strategy at OCBC Bank thought that these issues “could drag the overall unemployment rate higher to around 2.5 per cent this year, and the net employment data could moderate further or risk another contraction in the quarters ahead.”
According to a report by US-based Manpower Group, only 15% of employers in Singapore plan to increase their workforce in the first quarter of this year while 7% are seeking to trim their payroll.
For the first nine months of 2016, a total of 10,730 workers were laid off, representing a seven-year high since the global financial crisis of 2009. According to Manpower Minister Lim Swee Say, annual job growth will likely stabilise in the range of 25,000 to 40,000 annual jobs for the next three to five years. Gone are the days where Singapore created 100,000 to 200,000 jobs annually.
Singapore workforce lacks flexibility
One reason for this is the inflexibility of the workforce. Nearly half of the vacancies last year were for professionals, managers, executives and technicians. The food industry hires 4.5% of the workforce, and the industry is experiencing rapid automation. Singapore’s economy is transitioning to the digital economy, and thus the workforce needs to be able to grow along with this change regarding attitude and skillset.
Singapore’s workforce must be able to address these changes to limit unemployment and boost job matches. According to Kyrstal Tan, an economist at Capital Economics Ltd, many manufacturing jobs are exiting the country in which the retrenched workers have difficulty transitioning to other industries.
The Singaporean government is addressing this issue through the SkillsFuture movement. Last year, 380,000 Singaporeans benefited from the initiative. One of the key programs of the initiative is the SkillsFuture Credits. Singaporeans aged 25 and above get an opening credit of S$500 to take approved skills-related courses.
Singapore firms focusing on retention instead or recruitment
Another reason for this anaemic job creation is Singapore employers are focusing on retention, not recruitment. This means firms are boosting their salary budgets but not to add manpower, but to increase salaries for existing employees to keep them. According to Michael Page’s 2017 Asia Salary and Employment Outlook survey, over 60% of Singapore’s employers expect to offer employees a 1% to 5% salary increase.
Singapore’s job market looks to stabilise soon
Freelancing and home-based businesses are also on the rise. There are also initiatives to boost productivity, and the foreign workforce policies have tightened to transition towards higher skilled labour import. The IT job market will likely see high levels of recruitment this year.
With Singapore’s economy looking to stabilise this year, worker retrenchment will find a bottom and job creation will slowly stabilise in line with the ongoing economic restructuring.