Singapore Work Prospects—Officials indicated on Monday that Singapore’s labour market improvement is likely to continue in the coming year, but that the Russia-Ukraine crisis could obscure the Republic’s job position (March 14).
Mr Kenny Tan, divisional director of manpower planning and policy division at MOM, said the authorities are keeping a close eye on developments in Ukraine, which could lead to higher inflation through higher energy prices, for example, during a media briefing for the Ministry of Manpower’s (MOM) 2021 labour market report.
“Inflation is a problem that my Ministry of Trade and Industry colleagues are concerned about,” he added. “It will damage business competitiveness and viability, and there may be some knock-on consequences on the labour market.”
Apart from inflation, supply disruptions are also being constantly monitored by the government, according to MOM permanent secretary Aubeck Kam.
“There will be a similar impact on our labour market if there is an impact on our economy,” he said.
Due to the “substantial improvements” already witnessed in 2021, the rate of labour market recovery is likely to be more slow in 2022, according to MOM’s quarterly labour report.
The labour market upswing “should be sustained in 2022 as company operations continue to pick up,” notwithstanding the risks posed by the Russia-Ukraine conflict.
The forecast for many sectors in the United States remains mixed.
“Growth in outward-oriented sectors is projected to remain healthy, barring a dramatic recession in the global economy,” the research stated.
The information and communications, as well as the financial and insurance services sectors, are predicted to grow at a solid pace, thanks to “strong demand for IT and digital solutions, as well as credit and payment processing services,” which should keep labour demand high in these industries.
The gradual loosening of Covid-19 regulations in Singapore is expected to assist consumer-facing sectors like as food and beverage services and retail trade, and more personnel will be required to support this increase in company activity.
However, due to the progressive relaxing of travel restrictions around the world and the fledgling rebound in global travel demand, the tourism and aviation-related sectors are likely to recover slowly.
“It may take longer for employment levels in these sectors to revert to pre-Covid levels,” the research stated.
After a significant drop in 2020, total employment rebounded in 2021, according to the data.
Where Singapore Work Prospects Currently Stand
Information and communications, health and social services, professional services, administrative and support services, and financial services all saw an increase in employment.
Residents’ employment in the accommodation, air transportation and related services, and arts, entertainment, and recreation sectors, on the other hand, declined moderately, “indicating the consequences of tight travel restrictions for the majority of the year,” according to the research.
Non-residents were primarily affected by the reduction in the number of Employment Pass and S Pass holders, which fell by 15,300 and 12,200 respectively, while Work Pass holders fell by 2,400.
Non-resident employment fell in all industries, with the exception of construction, which saw an increase in the fourth quarter as border restrictions were gradually loosened.
What Singapore’s Unemployment Numbers Currently Are
As the unemployment situation “improved substantially throughout the year,” annual average unemployment rates in 2021 were significantly lower than in 2020.
Unemployment rates decreased from 3.0% in 2020 to 2.7% in 2021, with resident unemployment falling from 4.1 to 3.5 percent and citizen employment falling from 4.2 to 3.7 percent.
Unemployment rates fell to about December 2019 levels in January 2022.
In 2021, the yearly average resident long-term unemployment rate was 1.0 percent, unchanged from the previous year and higher than in 2018 and 2019. This is due to the fact that “structural mismatches take longer to evaporate,” according to the paper.
Nonetheless, business slack has “substantially improved,” with layoffs dropping from a high of 26,110 in 2020 to 8,020 in 2021, well below pre-Covid levels.
By the fourth quarter of last year, 1,200 employees had been placed on short work weeks or temporary layoffs as a result of the increase in economic activity. The amount is still higher than pre-pandemic levels, but it’s down from the third quarter, when 4,060 employees were placed on such plans.
Retrenched residents’ yearly re-entry rate increased from 62 percent in 2020 to 66 percent in 2021, a six-year high.
There were also improvements across the board in terms of age, education, and occupation.
In the fourth quarter of 2021, the seasonally adjusted recruitment rate increased to 2.5 percent, the highest level since 2014.
Over the quarter, the seasonally adjusted resignation rate remained constant at 1.7 percent, slightly lower than the average pre-Covid rate.
What Is Singapore’s Current State Of Job Vacancies
The number of job openings increased to 117,100 on a seasonally adjusted basis.
The ratio of job openings to unemployed people increased to 2.11 in October, up from 1.95 in September.
According to the survey, travel limitations affecting the intake of migrant workers contributed to the high number of job opportunities.
“However, with the gradual relaxation of these restrictions, we predict non-resident workforce numbers to improve in 2022, and job vacancies in industries that rely heavily on migrant labour to decline,” the report stated.
Resident employment growth has remained strong in growing areas such as information and communications, financial services, and professional services, while job vacancies have increased and stayed high.
How Does Inflation Affect Singapore’s Employment
According to economists contacted by TODAY, the Russia-Ukraine conflict could result in a drop in employment for a variety of reasons.
Due to the war, Maybank economist Chua Hak Bin reduced his employment prediction for 2022 from 100,000 to 75,000.
Manufacturing, transportation, and hotel industries will be harmed by a dramatic economic downturn in the European Union, higher energy costs, and supply chain interruptions as a result of the conflict, he said.
He added that “high salary and other cost pressures may dissuade enterprises from hiring and expanding their Singapore staff.”
The Russia-Ukraine crisis, according to OCBC Bank’s head of treasury research and strategy Selena Ling, will exacerbate supply chain bottlenecks and force prices higher for a wide range of commodities and food products, meaning increased inflation for the time being.
Consumer and corporate confidence will be harmed as a result of these dangers if the conflict continues.
“The labour market may be influenced in at least two ways: first, hiring plans may be put on hold as employers wait to see how the conflict plays out, and second, firms may try to cut expenses by lowering wage costs and limiting wage growth expectations,” she added.
While domestic-oriented sectors can pass on higher prices to consumers, export-oriented enterprises may not be able to do so, according to DBS senior economist Irvin Seah.
“(Export-oriented enterprises) must compete with cheaper suppliers from other countries,” Mr Seah said, adding that during such periods, such firms may have to halt hiring or even lay off staff.
“These are usually larger businesses with the ability to hire more personnel.”
Stagflation — when the economy experiences economic stagnation, high inflation, and high unemployment — could be feasible, according to CIMB analyst Song Seng Wun, depending on how long the conflict lasts and how widespread it gets.
While the situation on the ground is always changing, Mr Song believes that if inflation — which is expected to be about 2% this year — rises any more as a result of the conflict’s consequences, the consumer’s increased purchasing power may not be able to keep up.
“If the increase in cost (of living) outpaces pay growth, persistently rising inflation will start to influence our consumer activities,” he warned.
“With high inflation, you and I might be able to achieve minimal or no growth by reducing our spending.”
He went on to say that if the fight continues for more than six months, there could be negative economic growth and a long-term detrimental impact on the labour market.
Despite the Russia-Ukraine war, Mr Seah is optimistic that labour growth will continue to be high.
“At this moment in time, the war’s impact is limited, and much relies on whether the conflict intensifies,” he said. “The situation is still fluid, and I don’t believe anyone can predict how things will turn up.”