Labour Market, Second Quarter 2013

Unemployment Remained Low in a Tight Labour Market

13 September 2013

1. A tight labour market has seen unemployment remaining low, though it rose slightly in the second quarter of 2013. These are the key findings from the “Labour Market, Second Quarter 2013” report released by the Ministry of Manpower’s (MOM) Research and Statistics Department. The report is available online on the MOM's Statistics and Publications webpage.
   
   Main Findings for Labour Market, Second Quarter 2013
2. The seasonally adjusted overall unemployment rate was 2.1% in June 2013, up from 1.9% in March 2013. Long-term unemployment remained low and stable. Total employment rose by 33,700 in the second quarter of 2013, higher than the gains of 28,900 in the previous quarter and 31,700 in the second quarter of 2012. This brought total employment to 3,420,200 in June 2013, which was 4.0% higher than a year ago.
   
   MOM Statement on Labour Market Developments
3. MOM also released the attached Statement on Labour Market Developments, which conveys the Ministry’s outlook for the rest of 2013. The key thrusts of the Statement are:
   • In the first half of 2013, local employment gains exceeded foreign employment gains. Local employment rose by 34,100, up from the gains of 22,800 in the same period last year.
   • Foreign employment growth (excluding Foreign Domestic Workers) slowed to 27,000, down from the gains of 34,100 in the same period of 2012. This was the smallest growth since the first half of 2010, reflecting the continued fall in the number of Employment Pass (EP) holders and slower growth in Work Permit (WP) and S Pass holders.
   • Growth in foreign workers was largely driven by the construction sector due to infrastructure and housing developments. Excluding the construction sector and FDWs, foreign employment grew by just 11,700 in the first half of 2013, compared to the gains of 18,600 in the same period last year.
   • The labour market is expected to remain tight for the rest of the year.
4. Acting Minister Tan Chuan-Jin said, “Foreign employment growth moderated in the first half of 2013. The growth was largely driven by the needs of our construction sector. We will continue to take progressive steps to reduce the inflow of foreign workers, and urge companies to adopt practical productivity improvement strategies, as we move towards a manpower-lean economy. We will continue to press on with restructuring for quality economic growth that will generate good job opportunities for Singaporeans.”

Ministry of Manpower Statement on Labour Market Developments
13 September 2013

Introduction

1. In March 2013, the Ministry of Manpower (MOM) maintained its approach of taking progressive steps to raise the quality of our foreign workforce and reduce reliance on foreign labour, in line with the Government’s efforts to achieve economic growth driven by sustained productivity improvements rather than manpower growth. These efforts will help our economy remain competitive and vibrant, so that Singaporeans continue to have good job opportunities.
   
   Review of First Half of 2013
2. The labour market remained tight in the first half of 2013. The seasonally adjusted resident unemployment rate remained low at 2.9% in June 2013. The resident long-term unemployment rate¹ (0.7%) in June 2013 was also low, unchanged from a year ago. There were more job vacancies than job seekers during the first half of the year.
3. In the first half of 2013, total employment increased by 62,600, higher than the growth of 58,900 in the same period last year. This translated to employment growth of 4.0% from June 2012 to June 2013. As employment grew faster than GDP growth, productivity growth was negative in the first half of the year² .
4. The employment increase in the first half of 2013 was due to a significant increase in local employment. Growth in foreign employment moderated.
   
   
   Note: Employment change is the difference in the employment level at the end of the reference period compared with the end of the preceding period.
5. Local employment rose by 34,100 in the first half of 2013, up from the gains of 22,800 in the same period last year, indicating that employers hired more locals to meet their manpower needs. This reflects the various measures to increase the employability of locals. The increase was driven by the Services sector, from industries such as Community, Social and Personal Services, Professional Services, Administrative and Support Services, Information and Communications, and Transportation and Storage.
6. Foreign employment (excluding Foreign Domestic Workers or FDWs) grew by the smallest number in a half-year period since the first half of 2010, due to the foreign manpower tightening measures the Government introduced. In the first half of 2013, foreign employment (excluding FDW) grew by 27,000, down from the gains of 34,100 in the same period last year. This reflected the continued fall in the number of Employment Pass (EP) holders and slower growth in Work Permit (WP) and S Pass holders.
   
   
7. Though there was some movement of workers from the EP category to the S Pass category due to the raising of the qualifying criteria for EPs, the combined growth of EP and S Pass in the first half of 2013 was at its lowest since the first half of 2009.
   
   
8. Much of the foreign employment growth was driven by the construction sector. Excluding the construction sector and FDWs, foreign employment grew by 11,700 in the first half of 2013, compared to the growth of 18,600 in the same period last year, a fall of 37 per cent.
   
   
9. Redundancies remained relatively stable, totalling 5,200 in the first half of 2013, comparable to the 4,810 in the first half of 2012³ . For those who were made redundant, about 50% found employment again within six months. Unemployment rates of diploma and degree holders edged up from June 2012 to June 2013. This may largely be transitional as long-term unemployment rate of diploma and degree holders in June 2013 were comparable to levels a year ago. MOM will monitor this closely.
   
   Manpower Outlook for 2013
10. In August 2013, the Ministry of Trade and Industry upgraded Singapore’s GDP growth forecast for 2013 to 2.5 - 3.5%. MOM expects the demand for labour to remain strong for the rest of 2013, barring severe unexpected shocks in the external economy.
11. Labour demand in the Services sector is expected to be strong. In particular, labour demand from Accommodation and Food Services and Retail Trade will likely increase in the second half of the year, reflecting the seasonal pickup during the year-end festivities. It will be further bolstered by the opening of additional shopping malls and hotels by the end of 2013.
12. The Construction sector is expected to see strong job creation, given the ongoing public infrastructure development. These include the continuing construction of the Downtown MRT and Thomson MRT lines, as well as public and private sector housing projects.
13. On the supply side, we will continue to observe the effects of tightened foreign manpower policies as the latest measures took effect on 1 July 2013, especially in S Pass for the Services sector where the sub-dependency ratio ceiling was reduced.
14. The resident labour force participation rate (LFPR) increased to a record high of 66.6% in June 2012, largely due to the increased participation of older workers and women in the labour force. While there is still room for further improvement in LFPR for these groups, demographic constraints may limit the extent of local employment growth or overall LFPR improvement in the longer term.
15. In view of the demand and supply outlook, the labour market is expected to remain tight in the coming quarters. Unemployment should remain low, though it is likely to increase as the pace of restructuring picks up. Given the momentum in employment growth and time needed for productivity improvements to moderate manpower demand, employment growth for the year is likely to be high, similar to that observed last year.
    
    Conclusion
16. MOM will continue its approach of taking progressive steps to moderate foreign employment growth, as part of the Government’s effort to achieve quality economic growth driven by sustained productivity improvement. As restructuring picks up pace, MOM will continue to make sure that workers who are displaced have access to help to acquire new skills and find suitable jobs through WDA’s Caliberlink or Career Centres at the Community Development Centres.

¹ Refers to long-term unemployed residents (i.e. those unemployed for at least 25 weeks) as a percentage of economically active residents.
² GDP growth in the first half of 2013 was 2.0% (year-on-year), while real productivity growth was -2.0%.
³ Data pertain to private sector establishments each with at least 25 employees and the public sector.

Annex to Statement