Statement on Labour Market Developments

Introduction

1. The labour market improved slightly in the first half of 2017 (1H 2017). The resident unemployment rate and long-term unemployment rate declined slightly from March to June 2017. There were also fewer retrenchments and more job vacancies in 1H 2017. At the same time, local employment grew, while foreign employment declined — mainly due to a decrease in Work Permit Holders in Marine & Offshore Engineering and Construction sectors.
   
   Review of 1H 2017
   
   Employment
   
   Resident unemployment rate and long-term unemployment rate declined slightly
2. The seasonally-adjusted resident unemployment rate declined from 3.2% in March 2017 to 3.1% in June 2017, but remained higher than a year ago (3.0%).¹ At the same time, the seasonally-adjusted resident long-term unemployment rate declined from 0.8% in March 2017 to 0.7% in June 2017, at the same level as a year ago.
   
   Local employment grew
3. For the first time in three years, local employment grew in the first half of the year (1H 2017: 4,000), compared to declines in 1H 2015 (-8,900) and 1H 2016 (-200) (Figure 1). Growth occurred mainly in the Community, Social & Personal Services, Finance & Insurance Services and Information & Communication sectors.
   
   
   Foreign employment continued to decline
4. Foreign employment (excluding Foreign Domestic Workers (FDW)) contracted by 21,400 in 1H 2017, continuing the decline in 2H 2016 (-14,300) (Figure 2). Similar to 2H 2016, the decline was mainly due to a decrease in Work Permit Holders (-18,800) in sectors such as Marine & Offshore Engineering and Construction.
5. Employment of S Pass Holders remained flat (-300), while Employment Pass (EP) Holders declined (-2,400) for the first time since 1H 2013, mainly due to decreases in the Professional Services and Information & Communications sectors.
   
   
   
6. On the whole, total employment (excluding FDW) declined by 17,300 in 1H 2017.
   
   Retrenchments and Job Vacancies²
   
   Retrenchments declined, while resident six month re-entry rates remained stable
7. Retrenchments declined to 7,640 in 1H 2017, lower than 1H 2016 (9,510) but higher than in the earlier part of the decade (half-year average of about 6,000 between 2010 and 2015). Residents remained proportionally less affected, with their share of retrenchments lower than their share of employment.
8. At the same time, the six month re-entry rate into employment of retrenched residents was about two-thirds (64%) in 1H 2017³, comparable to 1H 2016 (65%). In particular, the re-entry rates were lower among those aged 50 & over (54%), degree holders (60%) and Professional, Manager, Executive & Technician (PMET) (61%).
   
   Ratio of job vacancies to unemployed persons improved
9. Along with an increase in job vacancies (46,800 in March 2017 to 49,000 in June 2017), the seasonally-adjusted job vacancies to unemployed persons ratio continued to improve, from 0.77 in December 2016 to 0.81 in March 2017, and to 0.85 in June 2017.
   
   Labour productivity grew
10. Overall labour productivity (as measured by real value-added (VA) per worker) rose by 2.8% in 1H 2017 over the same period last year. This was an improvement from the 0.6% growth in 1H 2016 and the 1.3% growth in 2H 2016 (Figure 3). Productivity growth in 1H 2017 was driven by the Manufacturing, Transportation & Storage, Wholesale & Retail Trade, Other Services and Business Services sectors. On the other hand, productivity declined in the Accommodation & Food Services, Construction, Finance & Insurance and Information & Communications sectors.
    
    
    Sectoral Performance and Outlook
    
    Manufacturing
11. Employment in the Manufacturing sector fell by 8,000 in 1H 2017, following declines in 1H 2016 (-5,300) and 2H 2016 (-10,100). The decline was due to a decrease in Work Permit Holders in the Marine & Offshore Engineering segment, as the segment continued to be weighed down by sluggish demand for oil rigs and oilfield & gasfield equipment amid sustained low oil prices. On the back of healthy VA growth, productivity in the Manufacturing sector rose by 12.1% on a year-on-year (YoY) basis in 1H 2017, higher than the 4.2% growth in 1H 2016 and 10.0% growth in 2H 2016 (Figure 4).
    
    
    
    
12. Manufacturing Outlook. While the hiring outlook remains modest, the growth outlook for the Manufacturing sector as a whole is positive in 2H 2017. Performance is likely to remain uneven across clusters. In particular, employment in the Electronics and Precision Engineering clusters, especially in Semiconductors and Machinery & Systems segments, is expected to increase, supported by the expansion in output. On the other hand, the Transport Engineering cluster is likely to remain a drag on employment growth, as the Marine & Offshore Engineering segment is likely to continue to face headwinds.
    
    Construction
13. Employment in the Construction sector declined by 23,100 in 1H 2017, continuing the decline in 2H 2016 (-13,600) and low growth a year ago (1H 2016: 2,100). The decline came amid weakness in both private sector and public sector construction activities, with the decrease mainly from Work Permit Holders. With continued contractions in Construction VA, productivity declined by 0.6% on a YoY basis in 1H 2017, extending the 1.7% decline in 2H 2016 but reversing the 0.8% growth in 1H 2016 (Figure 5).
    
    
    
    
14. Construction Outlook. Construction output for 2H 2017 is expected to remain lacklustre, weighed down by continued weakness in both private and public sector construction activities. The continued slowdown in Construction output is likely to weigh on employment in the sector.
    
    Services
15. Unlike the Manufacturing and Construction sectors, the Services sector saw employment growth in 1H 2017. Total employment (excluding FDW) in the Services sector grew by 13,700 in 1H 2017, lower than 1H 2016 (15,200) and 2H 2016 (20,800). Employment declined in sectors such as Wholesale & Retail Trade, on the back of an uneven performance in the various sub-segments of the sector. The declines were more than offset by employment gains in the Community, Social and Personal Services, Transportation & Storage, and Information & Communications sectors.
16. Productivity in the Services sector grew by 0.4% on a YoY basis in 1H 2017, compared a 0.8% decline in 1H 2016 and 1.1% decline in 2H 2016. The productivity declines in the Accommodation & Food Services, Finance & Insurance and Information & Communications sectors were more than offset by increases in the Transportation & Storage, Wholesale & Retail Trade, Other Services and Business Services sectors.
    
    
    
    
17. Services Outlook. With the global economic recovery expected to continue in 2H 2017, employment growth is likely to be supported by outward-oriented Services sectors such as Finance & Insurance and Transportation & Storage. At the same time, employment growth in the domestically-oriented services sectors is expected to remain stable. Specifically, sectors such as the Community, Social & Personal Services, particularly the Health & Social Services segment, should continue to see increases in hiring.
    
    Labour Market Outlook
18. The Ministry of Trade and Industry (MTI) has narrowed the 2017 growth forecast for the Singapore economy upwards to 2.0 — 3.0%, with full year growth likely to come in at around 2.5%, barring unexpected outcomes in the global economy and key sectors in the domestic economy. Against this backdrop, MOM expects labour demand to pick up in 2H 2017, in line with seasonal hiring as seen in previous years. Hiring is expected to remain cautious in sectors such as Construction and Marine & Offshore Engineering, while job opportunities will continue to be available in other sectors, particularly Infocomms & Media, Finance & Insurance, Healthcare, Professional Services, and Wholesale Trade.
19. In the medium term, labour supply will remain tight: local workforce growth will remain modest due to underlying demographics trends, while foreign workforce growth will continue to be moderated. Over the next three to five years, as the economy restructures to be more manpower-lean, productive and innovative, the average annual total workforce growth (excluding FDW) is expected to be in the range of 25,000 to 40,000.
    
    Conclusion
20. The labour market performance improved slightly in 1H 2017. While unemployment declined slightly in June 2017, the resident unemployment and long-term unemployment rates could remain elevated in the medium term with ongoing economic restructuring, as well as shifts in the composition of the resident labour force and job-skills mismatch.
21. Through the Adapt and Grow initiative, MOM and Workforce Singapore (WSG) will work with tripartite partners to help jobseekers and affected workers learn new skills and access new employment opportunities, especially in key growth sectors⁴ with good potential for quality job creation. We will also encourage employers to tap on Professional Conversion Programmes (PCPs) and other relevant programmes to hire more local jobseekers to meet their manpower needs. Companies undergoing restructuring should also prepare at-risk workers for new roles in the firm, so as to reduce the need to lay off workers.
22. Individuals who require assistance are strongly encouraged to visit Careers Connect under WSG, or NTUC’s e2i, for career guidance and coaching. Businesses can also tap into the available support under the Lean Enterprise Development Scheme to transform and grow, and improve the quality of jobs created.