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Statement on Labour Market Developments

Introduction

  1. The labour market improved in 2018. Total employment as well as local employment grew. Annual average unemployment and long-term unemployment rates were lower than a year ago and retrenchments were significantly fewer.
  2. However, labour market trends in 4Q 2018 were mixed. Total employment continued to grow, although at a slower pace, while unemployment and long-term unemployment rates in Dec 2018 were slightly higher compared to a year ago.1

    Review of 2018

    Employment2
  3. Total employment (excluding Foreign Domestic Workers (FDW)) grew by 38,300 in 2018, a reversal from the decline a year ago (-10,700).

    Local employment continued to grow
  4. Local employment growth in 2018 (+27,400) was higher than a year before (+21,300). Growth occurred mainly in Community, Social & Personal Services, Transportation & Storage, Financial Services, Information & Communications and Professional Services.

    Foreign employment grew, reversing decline in 2017
  5. At the same time, foreign employment (excluding FDW) grew by 10,900 in 2018, reversing the decline in 2017 (-32,000) (Figure 1). This was due to the stronger growth in the Services sector (+16,600 in 2018 compared to +10,700 in 2017), and the moderating decline in the Construction sector (-5,400 in 2018 compared to -32,800 in 2017).
  6. S Pass holders grew by 11,100, across all sectors. The increase was led by the Services sector, with the highest growth seen in Administrative & Support Services, Food Services, Information & Communications, Professional Services, and Transportation & Storage. On the other hand, Employment Pass (EP) holders continue to decline across sectors in 2018, as a result of the raising of the EP qualifying salary in January 2017. Over the last two years, the number of EP holders has declined by 6,400.

    Figure 1: Annual Employment Change (Excluding FDW) by Residential Status, 2013-2018

    Annual average resident unemployment and long-term unemployment rates improved
  7. The annual average resident unemployment rate fell to 2.9% in 2018, lower than the year before (3.1%). The improvement was broad-based across most age and education groups.
  8. Similarly, the annual average resident long-term unemployment rate (LTUR) fell to 0.7% in 2018, lower than 0.8% in 2017. However, residents aged 30-39, 50 & over, or with secondary-level qualifications saw a higher LTUR than the year before.

    Retrenchments and Job Vacancies3

    Retrenchments were significantly lower and the re-entry rate rose
  9. Retrenchments declined to 10,730 in 2018, significantly lower than the year before (14,720). The decrease was seen across the three broad sectors, Manufacturing, Construction and Services. This mainly reflected the fall in retrenchments attributed by retrenching companies to poor business or downturn in the industry, as the economy continued to expand in 2018. Residents made up 66% of the retrenchments in 2018, slightly lower than their share of employment (67%).
  10. The six-month re-entry rate into employment of retrenched residents was 64.2% in 4Q 2018, higher than a year before (63.2%). In particular, those aged below 30 (83.5%), 30 – 39 (75.7%), or Clerical, Sales & Service Workers (71.5%) had the highest rates of re-entry.

    Ratio of job vacancies to unemployed persons increased
  11. Reflecting further tightness in the labour market, the seasonally-adjusted job vacancies to unemployed persons ratio rose to 1.10 in December 2018, higher than a year ago (0.94).

    Income4

    Higher income growth at the median for Singaporeans
  12. Singaporean workers continued to earn higher incomes. The real median income (including employer CPF contributions) of full-time employed Singaporeans increased by 3.6% p.a. from 2013 to 2018, significantly higher than the 1.7% p.a. in the previous five years. Over the last five years from 2013 to 2018, real income5 at the 20th percentile6 grew faster (4.3% p.a.) than at the median (3.6% p.a.).

    Productivity7

    Labour productivity grew
  13. Overall labour productivity (as measured by real value-added (VA) per actual hour worked) grew by 3.7% in 2018, slower than the 4.9% growth in 2017 (Figure 2). In terms of real VA per worker, productivity rose by 2.5%, lower than the 4.1% growth in 2017.8 Overall productivity growth9 in 2018 was supported by gains in sectors such as Manufacturing and Financial & Insurance Services. On the other hand, productivity growth was weak in the Other Services Industries and Transportation & Storage sectors.

    Figure 2: Full-Year Year-on-Year (YoY) Growth in Real Productivity (at 2010 Market Prices) - Overall Economy

    Sectoral Performance and Outlook

    Manufacturing
  14. Employment in the Manufacturing sector continued to decline in 2018 (-2,400), but at a slower pace than in 2017 (-10,900). The decline was due to a decrease in Work Permit Holders (WPH) in the Marine Shipyard segment, as it continued to be weighed down by weakness in the rig-building activities, although the pace of decline moderated compared to 2017. Excluding the Marine Shipyard segment, employment in the Manufacturing sector grew by 1,100 in 2018. Productivity in the Manufacturing sector (VA per actual hour worked) rose by 9.8% in 2018, lower than the 14.9% growth in 2017 (Figure 3a).

    Figure 3a: Full-Year YoY Growth in Productivity - Manufacturing

    Figure 3b: Full-Year YoY Growth - Manufacturing

  15. Manufacturing Outlook. The hiring outlook in the Manufacturing sector is likely to remain modest as output growth is expected to moderate compared to the past two years. In particular, the expected moderation in the global demand for semiconductors and semiconductor equipment is likely to weigh on output and hence employment in the Electronics and Precision Engineering segments. Nonetheless, the anticipated modest improvement in the demand for oilfield & gasfield equipment and ship repair work will provide support to the Marine Shipyard segment.

    Construction
  16. Employment in the Construction sector contracted by 7,100 in 2018, a smaller decline compared to 2017 (-38,300). The smaller decline was due to a moderation in the decline in Work Permit Holders, which came amid an easing in the pace of contraction in construction activity. Despite the continued contraction in Construction VA, productivity (VA per actual hour worked) increased by 2.0% in 2018, reversing the decline of 1.3% in 2017 (Figure 4a).

    Figure 4a: Full-Year YoY Growth in Productivity - Construction

    Figure 4b: Full-Year YoY Growth - Construction

  17. Construction Outlook. Construction output is likely to see a turnaround this year after three consecutive years of contraction. The pickup in contracts awarded since the second half of 2017 is expected to translate into an increase in construction activities in the quarters ahead. With the anticipated improvement in both public and private sector construction works, employment in the Construction sector is expected to rebound.

    Services
  18. The Services sector saw employment growth in 2018. Total employment (excluding FDW) in the Services sector grew by 47,800 in 2018, higher than in 2017 (39,000). Employment growth was broad-based, with growth driven by the Community, Social & Personal Services, Transportation & Storage, Financial & Insurance Services, Information & Communications, and Professional Services sub-sectors. The employment gains more than offset declines seen in the Accommodation and Retail Trade sub-sectors.
  19. Productivity in the Services sector (VA per actual hour worked) grew by 2.2% in 2018, similar to the 2.0% growth in 2017 (Figure 5a). Productivity grew across all the Services sub-sectors, although there remains significant gaps with levels seen in developed countries.
  20. Services Outlook. Employment growth in outward-oriented Services sectors such as Financial & Insurance Services and Wholesale Trade is expected to ease with the moderation in external demand from key advanced and regional economies. At the same time, employment growth in domestically-oriented Services sectors is expected to remain resilient. Specifically, sub-sectors such as Community, Social & Personal Services, particularly the Education, Health & Social Services segments, should continue to see a positive hiring trend.

    Figure 5a: Full-Year YoY Growth in Productivity - Services

    Figure 5b: Full-Year YoY Growth - Services

    Labour market outlook for 2019
  21. The Ministry of Trade and Industry (MTI) projects that the Singapore economy will grow by 1.5% to 3.5% in 2019, with growth expected to come in slightly below the mid-point of the forecast range. In 2019, local workforce growth will remain modest due to the underlying demographics of an ageing population. The labour market is expected to remain tight, with job opportunities available in sectors such as Information & Communications, Financial & Insurance Services, Healthcare, Professional Services, Wholesale Trade and the Built Environment.

    Conclusion
  22. Overall, the labour market improved in 2018, but we note mixed trends in 4Q 2018. In 4Q 2018, total employment continued to grow, although at a slower pace, while unemployment and long-term unemployment rates rose. Reducing the Dependency Ratio Ceiling (DRC) and S Pass sub-DRC in the Services sector from next year will help to keep the labour market tight to sustain the impetus for restructuring, and support good employment outcomes for Singaporeans.
  23. MOM and Workforce Singapore (WSG), together with tripartite partners, will continue to support Singaporeans to take up good jobs and careers through the Adapt and Grow (A&G) initiative. To help jobseekers move into new growth areas brought about by technology, we will be increasing capacity for Professional Conversion Programmes (PCPs), and launching new PCPs relating to blockchain, embedded software, and prefabrication. We have also extended the Career Support Programme (CSP) for two years to continue providing salary support to employers who hire long-term unemployed jobseekers or retrenched mature workers. We will enhance the Career Trial programme to cater to part-time jobs, so as to support jobseekers who prefer the flexibility of part-time employment. Jobseekers can continue to tap on the Career Matching Services available at WSG’s Careers Connect and NTUC-e2i’s career centres.
  24. With the planned reduction of the Services DRC and S Pass DRC, businesses are encouraged to transform their business models and improve job quality so as to attract and retain local manpower. Firms can tap on various enterprise support such as the Enterprise Development Grant, Capability Transfer Programme and WorkPro under the Lean Enterprise Development (LED) Scheme to transform and grow. The LED scheme also provides transitionary manpower support for firms that require more time or resources to transit into new manpower-lean models.

FOOTNOTE

  1. In 4Q 2018, total employment (excluding Foreign Domestic Workers) grew by 14,700, slightly lower than the preceding quarter (16,700). Seasonally-adjusted resident unemployment rate was 3.0% in December 2018, slightly higher than a year ago (2.9%). Similarly, seasonally-adjusted resident long-term unemployment rate was 0.8% in December 2018, slightly higher than a year ago (0.7%). Data from Labour Market Report 2018, Manpower Research and Statistics Department, MOM.
  2. Data from the Labour Market Report 2018, Manpower Research and Statistics Department, MOM.
  3. Data from the Labour Market Report 2018, Manpower Research and Statistics Department, MOM.
  4. Data from the Labour Market Advance Release 2018, Manpower Research and Statistics Department, MOM.
  5. Deflated by Consumer Price Index – All Items.
  6. The 20th percentile income of full-time employed Singaporeans was $2,239 (including employer CPF contributions) and $2,000 (excluding employer CPF contributions) in June 2018.
  7. Data from Annual Economic Survey of Singapore 2018, MTI
  8. The stronger growth in real VA per actual hour worked compared to real VA per worker was due to a fall in the average number of actual hours worked per worker.
  9. References to labour productivity in this Statement refer to VA per actual hour worked (AHW), unless otherwise stated.