Singapore’s Q1 labour market outlook: There’s improvement, but situation yet to recover to pre-pandemic levels

According to the report, although the unemployment rate remained elevated, total employment increased, hiring activity increased, and re-entry rates have improved.

Singapore’s Ministry of Manpower’s (MOM) latest labour market report for Q1 pointed to a continued recovery for the country’s labour market from the impact of the COVID-19 pandemic.

There are five key findings:

1. Total employment grew by more than the preliminary estimates released in April. Non-resident employment continued to decline, but at a slower pace.
2. The number of retrenchments and re-entry rate among retrenched residents improved to pre-pandemic levels observed in 2018 and 2019.
3. Hiring activity increased, while unemployment rates continued to ease.
4. Job vacancies rose for the third consecutive quarter.
5. The ratio of job vacancies to unemployed persons rose significantly.

Minister for Manpower, Dr Tan See Leng, on his Facebook, said: “These are good signs, which we are happy to see. However, we expect recovery to be uneven across sectors, and there would be kinks along the way as the global COVID-19 situation continues to evolve.

“As we move forward together, we will need to restructure and rejuvenate our economy, so that we remain competitive and create good jobs for Singaporeans. Businesses will have to innovate and transform, and the workforce must also reskill and upskill to keep pace with the changing needs of the economy.”

Patrick Tay, Assistant Secretary-General, NTUC, added: “Moving forward in the next normal and the rest of 2021, there remains a significant amount of uncertainty and volatility as well as an uneven recovery as the deeply impacted sectors such as aviation, travel/tourism/attractions and hospitality continue to rough it out with the added pressure from P2HA.

“Notwithstanding, I am cautiously optimistic that both the retrenchment and unemployment figures in 2021 will not be a repeat of 2020 figures/numbers.”

Increase in total employment

Total employment grew for the first time in Q1 2021 (excluding 12,200 migrant domestic workers) after four consecutive quarters of decline.

Resident employment continued to increase, outpacing the decline in non-resident employment. The former’s employment was considered “broad-based across industries”, such as:

• Information and communications;
• Food and beverage services;
• Health and social services;
• Administrative and support services;
• Public administration and education; and
• Professional services.

The Employment Diffusion index (EDI) for resident employment, which measures the breadth of employment change across industries, remained above the mid-point of 50 in Q1 2021 at 61.1.

On the other hand, the decline in non-resident employment partly reflects the restrictions on the inflow of foreign workers due to public health reasons, as cited in the report.

The EDI for non-residents is at 27.0—below the mid-point of 50.

“This means that non-resident employment continued to fall in most industries, though the pace of decline has slowed,” shared in the report.

Unemployment rates eased, but remained elevated

Although the country’s unemployment rates declined further from February to March 2021, it remained elevated compared to pre-COVID-19 levels. The resident long-term unemployment rate, seasonally adjusted, remained unchanged at 1.1%.

The decline in unemployment rate, from February to March 2021, is as follows:

• Overall: from 3.0% to 2.9%;
• Resident: from 4.1% to 4.0%;
• Citizen: from 4.3% to 4.2%

Retrenchments and rate of re-entry into employment improved

In Q1 2021, the number of retrenchments was at 2,270. It declined for the second consecutive quarter. According to MOM’s statistics, the number of retrenchment last year at each quarter was:

• Q1 2020: 3,220
• Q2 2020: 8,130
• Q3 2020: 9,120
• Q4 2020: 5,640

In the same period, the six-month re-entry rate among retrenched residents rose for two consecutive quarters to 66%.

The study revealed: “There were fewer retrenchments across sectors.

“More than half of retrenchments which occurred in 1Q 2021 were due to restructuring and re-organisation, while retrenchments due to recession or downturn in industry made up a smaller proportion compared to a quarter ago.”

Number of employees placed on short work-week or temporary layoff halved

With COVID-19 restrictions gradually eased, the number of employees who were placed on short work-week or temporary layoff continued to decline.

In Q4 2020, it was at 8,710. In Q1 2021, it decreased to 4,020. This level, however, remains high compared to pre-pandemic quarters. Previously, in 2018 to 2019, it had an average of 740.

Ratio of job vacancies to unemployed persons improved

The number of job vacancies, seasonally adjusted, increased further to 68,400 in March 2021, exceeding its highest (65,500) in March 2015.

The ratio of job vacancies to unemployed persons improved to nearly one job vacancy for every unemployed person in March 2021 (0.96), an increase from a ratio of 0.75 in December 2020, with seasonal adjustments.

Job vacancies were reported in all industries, in particular:

• Manufacturing (mainly in fabricated metal products, machinery & equipment, and electronics);
• Public administration and education;
• Construction;
• Information and communications; and
• Financial services

On the next steps, ASG Tay added: “The biggest challenge from the figures and in-demand jobs is the need to overcome the structural unemployment problem…the structural mismatch of jobs, skills, and expectations.”

As such, MOM has urged both employers and employees to make use of various schemes that support local hiring, reskilling and job redesign.

Employers can look at:

• Jobs growth incentive;
• Career conversion programmes under the SGUnited Jobs and Skills Package;
• Job redesign programmes, such as the industry 4.0 Human Capital Initiative (iHCI) and Support for Job Redesign under the Productivity Solutions Grant (PSG-JR)

Employees, on the other hand, can look at Workforce Singapore (WSG) and NTUC’s Employment and Employability Institute (e2i) to assist them in their job search.

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