Labour Market, 2009

Labour market more resilient than in previous downturns

1. For the first time, Singapore experienced employment growth amid an economic recession in 2009. The labour market was more resilient than in previous downturns, supported by the Resilience Package and concerted tripartite efforts to save jobs. Although there were job losses in the first half of 2009, employment rebounded quickly and recovered in the second half of the year. As locals experienced employment gains while foreign employment declined, the share of foreigners in employment fell slightly from a year ago.

2. Total employment grew by 37,500 in the fourth quarter of 2009 more than double the gains of 14,000 in the preceding quarter and higher than the 21,300 in the fourth quarter of 2008. For the whole of 2009, total employment increased by 37,600 or 1.3%. Job gains in the second half of the year more than offset the losses in the first half. The bulk of employment gains came from the services sector which added 31,500 workers in the fourth quarter, supported by hiring for the year-end festivities and the Integrated Resorts. For the whole of 2009, services employment rose by 55,600. Construction added 4,600 workers in the fourth quarter, bringing its total gains to 25,100 in 2009. After shedding workers for four consecutive quarters, manufacturing employment rose by 700 in the fourth quarter. As the employment gains were not sufficient to offset the earlier losses, manufacturing employment contracted by 43,700 in 2009.

3. Despite the GDP contraction (-2.0%) , local employment increased by 41,800 or 2.2% in 2009. In contrast, foreign employment declined by 4,200 or 0.4% in 2009. There were 1,053,500 foreigners forming 35.2% of the total employment in December 2009, 0.6%-pt below the peak of 35.8% in December 2008. Excluding foreign domestic workers, the foreigners’ share of employment was 30.7% in December 2009, down from 31.4% a year ago.

4. The labour market was more resilient than in previous downturns. Employment only started to fall in the first quarter of 2009, three quarters after GDP started declining in the second quarter of 2008. This was unlike previous downturns in 2001 and 1997/98 when employment lagged GDP by two quarters. The employment contraction this time round was also unusually small and short, lasting only two quarters with a total loss of 13,800 in the first half of 2009, despite four quarters of sequential GDP decline . The employment losses were quickly recovered in the third quarter. In the earlier downturns in 1984/85 and 2001, employment fell over eight consecutive quarters with a total loss of 136,000 and 79,500 respectively. In the 1997/98 Asian economic crisis, employment only started to recover after a year of losses totalling 42,100 jobs.

5. Driven by strong employment growth in the fourth quarter of 2009, unemployment improved significantly. The overall unemployment rate fell from a seasonally adjusted 3.4% in September 2009 to 2.1% in December 2009. Similarly, the unemployment rate for residents decreased from 5.0% to 3.0%. The rates were also lower than in December 2008 (overall: 2.5%, residents: 3.6%). There were 59,800 unemployed residents in December 2009. The seasonally adjusted number was 61,100.

6. The number and share of unemployed residents who had been looking for work for at least 25 weeks (i.e. long-term unemployed) rose from 12,900 or 18% of job seekers in December 2008 to 13,900 or 23% in December 2009. However, the long-term unemployment rate was unchanged at 0.7% from a year ago, reflecting the decline in unemployment rate.

7. As the economy emerged from the recession, redundancies fell for the third successive quarter to 2,220 in the fourth quarter of 2009, back to pre-recession quarterly levels. In all, a total of 23,430 workers were made redundant in 2009, comprising 20,160 retrenched and 3,270 whose contracts were prematurely terminated. The redundancy was higher than the 16,880 in 2008, due to the large number laid off in the first quarter of 2009 amid the economic downturn.

8. The re-employment rate rose slightly in December 2009 after improving significantly in the previous quarter. CPF records showed that 52% of residents laid off in the third quarter of 2009 were re-employed by December. The re-employment rate of 52% (within six months after redundancy) was up slightly from 51% in September 2009, improving from the low of 43% in June 2009.

9. Reflecting improving business confidence in the economy, job vacancies increased by 30% from 26,100 in December 2008 to 33,800 in December 2009. This was slightly below the 34,900 in September 2009 due to seasonal factors. After adjusting for seasonality, job vacancies rose for the third consecutive quarter. With the improvement in unemployment, the seasonally adjusted ratio of job vacancies to unemployed persons improved sharply to 81 openings per 100 job seekers in December 2009, from 52 in September 2009 and December 2008.

10. With more job opportunities available, labour turnover has increased. Both the monthly resignation rate at 1.7% and recruitment rate at 2.4% in the fourth quarter were higher than the corresponding 1.6% and 2.2% in the same quarter of 2008. The seasonally adjusted rates also saw quarter-on-quarter increases for the third straight quarter in the case of resignation rate and second successive quarter for recruitment rate.

11. Reflecting the improvement in GDP, labour productivity rose over the year by 3.0% in the fourth quarter of 2009. This was the first increase in nine quarters. The improvement was broadbased with manufacturing (11%) and financial services (9.9%) experiencing the sharpest gains. Nevertheless, labour productivity slid by 4.7% in 2009, following the decline of 7.6% in 2008. All industries, except manufacturing and construction, saw declines in labour productivity in 2009.

12. Nominal earnings decreased over the year by 1.6% in the fourth quarter of 2009, easing from the 3.0% decline in the preceding quarter. Earnings in 2009 declined by 2.6%, after rising by 5.4% in 2008. After adjusting for inflation, the decline in real earnings was 3.2% in 2009, deeper than the contraction of 1.2% in 2008.

13. The overall unit labour cost (ULC) for the whole economy declined over the year by 6.8% in the fourth quarter of 2009, larger than the 5.0% decline in the preceding quarter. In 2009, overall ULC dipped by 0.1%, after rising by 8.3% in 2008. In manufacturing, ULC fell by 12% in the fourth quarter of 2009, moderating from the 20% decline in the previous quarter. For the whole year, manufacturing ULC declined by 4.8%, a reversal from the rise of 13% in 2008.

14. In summary, the labour market was more resilient during the 2009 recession than in previous downturns. Employment gains in the second half of the year more than offset the losses in the first half, resulting in the growth in employment in 2009, despite the recession. After peaking in the first quarter of the year, redundancies have eased to around pre-recession quarterly levels. Amid an increase in job opportunities, unemployment declined significantly as the year drew to a close.

For More Information

15. The report is available on the Ministry of Manpower website.