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Statement on Labour Market Developments

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. 

    In Thousands 
     
    Figure 1: Employment Change (excluding FDW) 

    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. 

    In Thousands 
     
    Figure 2: Foreign Employment Change by EP, S Pass, WP excluding FDW 

    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.
  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. 

    In Thousands 
     
    Figure 3: Employment Change of EP and S Pass holders 

    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.
  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. 

    In Thousands 
     
    Figure 4: Foreign Employment Change (excluding FDW) by Construction and Non-Construction Sectors 

    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.
  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