Slight rise in unemployment reflects 'normalisation' from stellar growth last year, say economists
SINGAPORE - Against a backdrop of cautious business sentiment, the number of jobs created here slowed in the second quarter of the year: Between April and last month, 22,800 jobs were added to the economy, compared to 28,300 in the first three months of the year and 24,900 during the same period last year.
According to preliminary figures released by the Manpower Ministry (MOM) yesterday, the overall unemployment rate also rose from a seasonally-adjusted 1.9 per cent in March to 2.1 per cent last month.
Correspondingly, the unemployment rate for Singaporeans and Permanent Residents increased from 2.7 per cent to 3 per cent. Seasonally adjusted, an estimated 62,700 residents were unemployed last month.
MOM said the higher unemployment rates reflected "the increase in job seekers as tertiary graduates entered the labour market and students sought employment during the mid-year school vacation".
The ministry noted that both overall and resident figures were slightly lower than in June last year, when the figures stood at 2.2 per cent and 3.1 per cent, respectively.
Analysts Today spoke to pointed out that, despite the tight labour market, unemployment could have risen due to the mismatch between the skills of jobseekers and those employers are seeking.
Noting that the service sector continued to be the main driver of job growth - making up 18,800 of the total jobs created in the second quarter - Credit Suisse research analyst Kun Lung Wu said employers still could not fill these jobs partly because of the lack of interest from Singaporeans.
"For the service jobs that locals don't have the qualifications to fill, the Government has tightened criteria for foreign workers to work here, so those jobs are not being filled," he said.
CIMB-GK Research regional economist Song Seng Wun said the slowdown in job growth reflected a "normalisation" in economic activity after the strong economic growth last year.
Citing surveys released by the Economic Development Board and the Department of Statistics which found that employers in manufacturing and services expected to maintain or increase hiring, Mr Song said the continued increase in manufacturing jobs - which had declined last year - was "encouraging".
Minister of State (Manpower and National Development) Tan Chuan Jin told Channel NewsAsia that it was "quite unrealistic" to expect last year's stellar economic growth to continue. "Probably it's good to have it ease off somewhat because a lot of people do find that the labour market is actually very tight," he said.
"So this would mean in terms of companies, in terms of the hiring opportunities, it would be probably slightly better for them."
Capital Economics Asia economist Vishnu Varathan said healthy growth can be expected from the hospitality services sector, but employers in the financial services sector are likely to moderate their hiring outlook given the economic turmoil in Europe and the United States. The drop in service jobs created - 18,800 in the second quarter compared to 26,500 in the previous quarter - is probably due to the slowdown in hiring by the financial services sector, after aggressive hiring last year, he added.
Meanwhile, 1,500 workers were retrenched and 400 had their contracts terminated prematurely, resulting in a total of 1,900 workers made redundant between April and June, according to MOM's preliminary estimates. This was lower than the 2,750 redundancies in the previous quarter.
Services laid off 900 workers, followed by manufacturing with 600. Construction displaced another 400 workers.
As for whether the global uncertainty will affect the graduates entering the job market this year, Mr Song said a "worst-case scenario" of a recession was not expected at this point, and the unemployment rate should normalise by the third quarter as they find employment.
- Posted using BlogPress from my 4GiPhone