Labour Market, Third Quarter 2009

Labour market shows encouraging signs of turnaround
– Employment up, redundancies down with more job openings

With the economy improving, total employment grew by 14,000 in Q3 09. The gains offset the losses in the preceding two quarters (Q1 09: -6,200; Q2 09: -7,700), resulting in total employment in Sep 09 recovering to around Dec 08 level. Employment in services rose by 12,700, significantly higher than the gains of 3,800 in Q2 09. Construction expanded (7,400) at a faster pace than in the previous quarter (4,700). Manufacturing shed workers for the fourth consecutive quarter (-6,400), but the losses were substantially lower than in the first two quarters this year (Q1 09: -22,100; Q2 09: -15,900).

2. The seasonally adjusted overall unemployment rate rose slightly to 3.4% in Sep 09 from 3.3% in Jun 09. Among the resident labour force, the rate increased to 5.0% in Sep 09. This followed the decline from 4.8% in Mar 09 to 4.6% in Jun 09 when some residents then had deferred their job search and pursued courses amid the difficult job market. Nevertheless, the unemployment rates were still below the peak (overall: 4.8%; resident: 6.2%) experienced in Sep 03 due to the SARS outbreak. 83,800 residents were unemployed in Sep 09. The seasonally adjusted figure was 100,300, higher than 91,500 in Jun 09.

3. Long-term unemployment has risen, as it takes longer for job seekers to find employment amid cautious hiring sentiments during the downturn. The number of resident job seekers who had been looking for work for at least 25 weeks almost doubled from 9,600 in Sep 08 to 18,400 in Sep 09, and their share among resident job seekers increased from 17% to 22%. They formed 0.9% of the resident labour force in Sep 09 compared with 0.5% in Sep 08, but remained below the highs registered in the same period of 2003 (1.6%) and 2002 (1.4%).

4. Redundancies decreased for the second consecutive quarter. 2,110 workers were retrenched and another 350 were terminated prematurely from their contracts, resulting in a total of 2,470 workers made redundant in Q3 09. This was substantially lower than 5,980 in Q2 09 and the record 12,760 laid off in Q1 09.

5. The re-employment rate rose in Sep 09. Based on CPF records, half (50%) of residents retrenched in Q2 09 were re-employed by Sep 09. This was an improvement from the record low of 43% in the last quarter, but was still below the 62% recorded a year ago.

6. Reflecting the improving economic environment, job vacancies rose for the second consecutive quarter to 34,900 in Sep 09, up 42% from Jun 09 but were slightly below the 36,000 in Sep 08. After adjusting for seasonality, total job vacancies increased by 46% over the quarter, but were 3.8% below the level in Sep 08. Driven by the sharp increase in job openings, the ratio of job vacancies to unemployed persons rose over the quarter from a seasonally adjusted 33 to 52 openings per 100 job seekers in Sep 09. Nevertheless, this was still lower than the 80 openings per 100 job seekers in Sep 08.

7. Labour productivity fell over the year by 0.7% in Q3 09, significantly less than the decline of 6.0% in the preceding quarter. Over the same period, nominal earnings decreased by 3.0%, its third consecutive quarter of decline (Q1 09: -3.7%; Q2 09: -2.2%). After adjusting for negative inflation in Q3 09 (-0.4%), the decline in real earnings was 2.6%, deeper than the contraction in the preceding quarter (-1.8%).

8. Overall unit labour cost (ULC) fell by 4.8% in Q3 09, after thirteen straight quarters of increase. Reflecting the improvement in manufacturing labour productivity, the ULC in the sector fell by 18%, a larger decrease from the 7.9% decline in Q2 09. Driven by the declines in ULC, service costs and government fees, the unit business cost (UBC) in manufacturing fell by 11% in Q3 09, deeper than the decline of 7.1% in the previous quarter.

9. In summary, the labour market has shown signs of a turnaround. Employment has recovered from the losses experienced during the downturn. Significantly fewer workers were made redundant and job vacancies increased for the second straight quarter. Nevertheless, long-term unemployment has worsened as unemployment rose in September.

For More Information

10. The report is available online on the Ministry of Manpower's website.