Labour market to deteriorate further as weak growth dampens employment demand: MAS

Demand will be "permanently" lower.

Singapore's unemployment rate is expected to rise this year on back of weak external growth, the continued effect of restructuring and increasing skills mismatches within the resident workforce, the Monetary Authority of Singapore said in its latest macroeconomic review.

The MAS noted that recent employment statistics have not been particularly promising. The number of unfilled job openings contracted in 2015, while the ratio of job vacancies to unemployed person also inched down. The incidence of redundancy also rose sharply in the fourth quarter of 2015, suggesting that firms have been more willing to lay off workers.

The report also showed that residents who have been laid off are finding it harder to find new jobs within six months, with the re-entry rate falling steadily from March to December 2015.

PMETs found it particularly difficult to re-enter the workforce, with only 48% of residents PMETs made redundant able to re-enter the workforce within six months. This is much lower than clerical, sales & service workers with a re-entry rate of 63%, and production & transport operators, cleaners & labourers with a re-entry rate of 53%.

"This could be due to various reasons, including skills mismatches in the resident labour market and inadequate remuneration," the MAS said.
As a result of weak labour demand, wage growth is expected to moderate further in coming quarters. In 2015, full-year wage growth fell to 3.5%, slightly below the 10-year historical average of 3.6%.

“Both labour demand and supply in the economy are settling at permanently lower levels, in line with the moderation in Singapore’s trend GDP growth and ageing population In the near term, labour demand will continue to hinge heavily on cyclical conditions and is expected to remain subdued,” said the report.