Retrenchment and Re-employment, 2006 - Re-employment Prospects of Retrenched Residents at a Nine-Year High

The re-employment prospects of retrenched residents improved to a nine-year high in 2006, amid increased job opportunities available. This is in spite of a number of large scale retrenchment exercises in the electronics industry that saw more workers laid-off in 2006 than a year ago. These are the key findings from the “Retrenchment and Re-employment, 2006” report by the Ministry of Manpower's Research and Statistics Department. The report examines the incidence of layoffs across different industries, three major occupational groups and the reasons for retrenchment.

2.   Amid increased job opportunities, the annual average re-employment rate (within 6 months after retrenchment) rose to a post-Asian crisis high of 66% in 2006. The improvement was felt across the various age, education and occupational groups.

3.   Specifically, the re-employment rate of residents retrenched from PMET jobs rose from an average of 65% in 2005 to a post-Asian crisis high of 73% in 2006. This exceeds the rate for the other two occupational groups, unlike in past years when clerical, sales & service workers were the most re-employable. Both younger (aged below 40) and mature (aged 40 & over) retrenched PMETs benefited from the robust job market. The rates for both groups (76% for those aged below 40 and 69% for those older) are higher than the overall re-employment rate (66%). Previously, only younger PMETs experienced a re-employment rate that is above the overall re-employment rate.

4.   In 2006, private sector establishments each with at least 25 employees retrenched 12,359 workers. This exceeded the 10,294 laid-off in 2005, but is only about half the number retrenched (25,838) during the economic downturn in 2001. This translated to an incidence of 10 retrenched per 1,000 employees in 2006, a slight increase from 9.3 per 1,000 a year ago. The incidence of retrenchment in 2006, however, was among the lowest recorded over the decade, down substantially from the last peak of 25 retrenched per 1,000 in 2001.

5.   Manufacturing had a substantially higher incidence of retrenchment (24 per 1,000) than services (4.4 per 1,000) and construction (2.8 per 1,000). While the incidence of retrenchment rose in manufacturing for the second straight year, it had steadily declined in services since hitting a high of 19 laid-off per 1,000 employees in 2001. Similarly, the incidence of layoffs for production & related workers rose for the second consecutive year to 15 per 1,000 in 2006. This is unlike the other two occupational groups where the incidence of job loss generally trended downwards after recovering from the 2001 economic downturn, to 8.4 per 1,000 for professionals, managers, executives & technicians (PMETs) and 4.7 per 1,000 for clerical, sales & service workers.

6.   With the improved economic conditions, fewer workers were retrenched due to downturn and cost factors in 2006. The most common reason for retrenching workers was reorganisation of businesses (e.g. merger or change in management).

7.   The less educated without secondary qualifications continued to be the most vulnerable with high risk of retrenchment and below-average re-employment rates, suggesting that they continued to face structural challenges in the labour market.

8.   The report is available online at the Ministry of Manpower's website.