SINGAPORE: As Singapore’s outlook darkens with growth cooling to levels last seen a decade ago, there could be more retrenchments and fewer job vacancies ahead, said economists.
The job losses will likely come from outward-oriented sectors, which have been hit by a protracted trade spat between the United States and China.
Already for the first quarter, data from the Ministry of Manpower (MOM) showed an increase in retrenchments – from 2,510 in the previous quarter to 3,230 – on the back of a near three-fold jump in job losses in the manufacturing sector.
The economy grew 1.1 per cent year-on-year during the first quarter but amid falling factory activity and exports, growth in the second quarter slowed sharply to a decade-low 0.1 per cent on a year-on-year basis based on recent flash estimates.
DBS senior economist Irvin Seah said it is “pretty clear that the outlook for the labour market isn’t going to be great” given the “drastic” growth slowdown. “You can only expect retrenchments to pick up and job vacancies to decline in the coming quarters.”
Manufacturing will continue to shed jobs in the coming quarters, with the unpredictable trade spat coinciding with a fading global electronics cycle, experts said.
“The downturn in the electronics cluster has resulted in cutbacks in electronics sector jobs, which is expected to continue during the second half of 2019,” said Mr Rajiv Biswas, chief economist for Asia Pacific at data firm IHS Markit.
The manufacturing sector, which accounts for one-fifth of the economy, is also seeing old jobs being made obsolete by automation, added Mr Seah.
Beyond manufacturing, economists are also keeping a cautious eye on the outward-oriented services sectors.
While electronics accounted for 18 per cent of the retrenchments in the first quarter, services industries such as wholesale trade and transportation and storage followed close behind with 16 and 10 per cent, respectively, MOM’s labour report showed.
READ: Retrenchments grow in Q1 as manufacturing takes a hit: MOM
While domestic services segments can offer support, they make up relatively smaller shares of growth and “may not be enough to offset the receding tide”, said Mr Seah, referring to the sector’s 1.5 per cent quarter-on-quarter dip in the second quarter on a seasonally adjusted basis.
Further weakness in services is “the bigger worry”, added the economist, given how the sector accounts for about two-thirds of the economy and employment, although the tightening of foreign manpower quotas from January 2020 may mitigate the fallout on this front.
Meanwhile, “undercurrents” like the recent job cuts at German banking giant Deutsche Bank will add to the retrenchment figure in the third quarter, said CIMB private banking economist Song Seng Wun.
READ: Singapore economic growth slows to 0.1% in Q2, lowest in a decade
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“UNEVEN” LABOUR MARKET
Still, even as prospects are set to sour in certain sectors and translate into higher layoffs, some economists were quick to add that job opportunities remain.
Mr Song pointed to sectors that have remained resilient thus far, such as modern services on the back of a Government-led push in digitalisation.
“We now have a strange landscape where headline growth numbers look quite discouraging but underneath, there are pockets of strength,” he said.
“This will be reflected in terms of how retrenchments will continue to edge up, reflecting the moderation in external demand, yet growth in certain pockets will continue to create jobs.”
Likewise, Mr Biswas said the structure of employment growth by sectors will remain “very uneven”, with positive growth in “new economy jobs”.
These include infocomm technology, buoyed by a digital revolution and industrial automation, as well as enhanced cybersecurity needs. Financial services is also benefiting from Singapore’s role as a leading hub for segments such as asset management, financial technology and insurance.
Manpower Minister Josephine Teo, in a Facebook post after the release of dismal second-quarter flash estimates on Jul 12, noted that there are still 60,000 unfilled vacancies despite the growth slowdown.
About half of them are for professionals, managers, executives and technicians (PMETs) in sectors like financial services and professional services.
READ: Singapore not expecting a full-year recession at this point, says DPM Heng Swee Keat
When asked for a further breakdown, MOM said nearly 70 per cent of the PMET vacancies come from financial services (4,400), public administration and education (4,900), professional services (3,400), infocomm technology (3,300), wholesale trade (2,400), and health and social services (2,400). The other PMET roles are “distributed across many other sub-industries”, the spokesperson said.
The remaining 30,000 unfilled jobs are for non-PMETs, which are “more or less equally distributed between clerical, sales and service workers and production and related workers”.
Food and beverage services (3,100), construction (2,400), transportation and storage (2,300), retail trade (2,000), security and investigation (1,500), accommodation (1,400), health and social services (1,200), and cleaning and landscaping (1,100) made up the bulk of these positions.
About one in three vacancies are unfilled for at least six months, with non-PMET jobs generally harder to fill, according to MOM.
Office workers at Raffles Place in Singapore. (File photo: Marcus Mark Ramos)
JOBS NOT FOR EVERYONE?
Two recruitment firms – Hays and Robert Walters – that CNA approached said they have not seen a rise in jobseekers, though the former said “retrenchment has become an increasingly common reason” among its applicants.
They also have not noticed any hiring sentiment change among businesses as yet.
Demand for tech talent, in particular, has been strong across all industries and will remain so as demand outweighs supply, said Robert Walters Singapore’s managing director Rob Bryson.
However, there may be some who will have a harder time looking for jobs.
“Generally, we observe that older employees among PMETs will find it more difficult to find a job because of technological disruption and a slowing economy,” said Mr Bryson.
READ: MOM to focus on career mobility for all workers
PMETs accounted for nearly 70 per cent of the retrenched residents in the first quarter. They continue to make up the majority of layoffs as they form a higher share of the local workforce, said MOM.
The same labour report also showed PMETs and degree holders continuing to observe below-average re-entry rates into employment, although their rates have trended up from the first quarter of 2018.
As the jobs market outlook softens in the months ahead, PMETs will likely continue to bear the brunt, economists said.
One issue is the job-skill mismatch.
Referring to the “new economy jobs” in infocomm technology and others, Mr Biswas said: “The jobs being created in these sectors are skilled and specialised, resulting in a skills mismatch for workers leaving other sectors.”
Mr Seah, who has written reports on PMETs becoming an “exceptionally vulnerable” segment in the labour market here, added that PMETs typically develop deep skillsets required for their roles. This makes it difficult for them to transit into other industries.
Those with higher financial obligations, especially middle-aged PMETs, will also find it hard to accept lower-paying jobs, he added.
In her Facebook post, the Manpower Minister had said there is no shortage of programmes to support willing workers in their transition.
She cited the more than 100 Professional Conversion Programmes in over 30 sectors, as well as Career Trial programmes that aim to help jobseekers gain experience through short-term work trials.
READ: Nearly one in four of new entrants to ICT sector last year were PMETs who switched roles
READ: Part-time roles included in Career Trial programme to help more job seekers
Mr Seah thinks there is a need for a more pre-emptive approach as the economy hits the brakes.
There can be further enhancements to existing schemes that help workers pick up relevant skills, or a review of existing guidelines concerning skilled foreign workers.
To mitigate the risk of further retrenchments, the Government could also kickstart broad-based industry consultations.
“This is just to gather feedback and be ready in case we do dip into a recession. It doesn’t mean that it must translate into immediate policies but we must step up the effort,” said Mr Seah.
On the part of workers, being up to date with new knowledge and competencies will be necessary.
“That being said, it is dangerous to carry the mindset that a three-day course in data analytics would suffice in making them a relevant candidate,” said Mr Grant Torrens, regional director at Hays Singapore.
“To make their case even stronger, job seekers need to showcase to hiring managers that they are doing everything they can to get into their field of interest.”
