The introduction of the Phase 2 (Heightened Alert) measures has been weighing on several of Singapore’s economy, including the labour force.
Total employment for 2Q2021 ended June fell by 15,700, reversing from the increase seen in 1Q2021 ended March that came after a year of declines in 2020.
The Ministry of Manpower (MOM) attributes this to slower resident employment growth which came on the back of domestic-oriented sectors such as food & beverages services and retail trade which have taken a hit from the tighter safe management measures.
A further decline in the metric was mitigated by a steady growth in outward-oriented sectors such as information and communications, professional services and community, social and personal services.
Meanwhile, non-resident employment declined more sharply across most sectors amid continued restrictions on the inflow of migrant workers.
The construction industry which has been particularly affected by the restrictions saw employment levels dip by 5,200 in 2Q2021, according to MOM’s preliminary numbers.
The manufacturing sector – which has been a key industry driving Singapore’s economic growth – saw employment levels dip by 3,900, while the services sector (excluding migrant domestic workers) saw a shrinkage of 6,300.
The latest set of numbers did not indicate the specific figures for the changes in resident and non-resident employment levels.
Despite the declines in employment levels, Singapore’s unemployment rates continued to improve in June. The overall unemployment rate came in at 2.7% improving by a 0.1%-point from 2.8% in May.
Resident unemployment edged down to 3.7%, from 3.8%, while that for citizens was down by 0.2%-points from 4.0% in May to 3.8% in June.
Overall, the number of unemployed residents fell to 86,600 in 2Q2021, from 95,500 in March.
Aside from this, retrenchments for 2Q2021 edged up to 2,500 from the 2,270 seen in the previous quarter. MOM noted that this is based on latest survey returns to date.The ministry attributes the modest uptick to layoffs in the manufacturing and construction sectors.
No notable increases were observed in sectors such as food & beverages services which have been directly impacted by the tighter restrictions. Conversely, declines were seen in the retrenchments in the services sector such as in air transport & supporting services.
MOM notes that the likelihood of retrenchments in 2Q2021 is expected to be at 1.3 retrenchments per 1,000 employees – similar to the 1.2 rate seen in 1Q2021 and comparable to pre-pandemic levels in 2018 and 2019.
MOM reckons that the rise in the delta variant Covid-19 cases globally as well as the Phase 2 (Heightened Alert) measures from 16 May to 13 June may have dampened the hiring intent of companies.
This was echoed by two-thirds or 64% of the companies polled by the MOM who noted they had plans to increase hiring. This is down from 73% seen in March.On the bright side, 1 in 3 or 32% of the respondents indicated intentions to raise wages within the next three months.
Samuel Gan, senior vice president for capital markets at investment company ADDX says the latest set of numbers is “encouraging and contains bright spots”.“We expect unemployment to continue trending lower in the second half of 2021 but still remain above pre-COVID-19 levels, as Singapore achieves its high vaccination targets and begins a further easing of pandemic-related restrictions,” he adds.
Even so, Gan points out the impact of the delta variant and the expiry of government support measures in the coming quarters as possible downside risks to the employment outlook.