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Statement on Labour Market Developments 2019

Introduction

  1. The labour market held up in 2019. Compared with 2018, local employment grew. Retrenchments remained low with the re-entry rate of affected workers improving. Singapore citizens also continued to earn higher incomes in the recent five years. However, unemployment rates edged up and the ratio of job vacancies to unemployed persons declined. Given the continued increase in employment, this suggests possible mismatches in the labour market that bear closer monitoring.

    Review of the Labour Market in 20191
  2. Total employment (excluding Foreign Domestic Workers (FDW)) grew by 57,0002 in 2019. This was the largest increase in the past five years, reflecting continued growth in local employment, and foreign worker increases in Construction.

    Figure 1: Annual employment change (excl. FDW) by residential status, 2015 – 2019
  3. Local employment growth in 2019 (28,3003) was higher than in 2018 (27,400). The majority of the increase was in Services industries, including community, social & personal services, professional services, financial & insurance services and information & communications. Employment in Manufacturing and wholesale & retail trade contracted due to a fall in output.
  4. Foreign employment (excluding FDW) growth in 2019 (28,700) was driven by Work Permit & Other Work Passes (WP+) holders in Construction (12,700). By pass type, foreign employment growth was led by WP+ (16,300 excluding FDW), and Employment Pass (EP) holders (7,900).
  5. While unemployment rates edged up slightly in 2019 (overall: 2.3%; resident: 3.1%4; citizen: 3.3%), they remained in the fairly low range of recent years. The resident long-term unemployment rate held steady at 0.7%.
  6. Retrenchments in 2019 (10,690) stayed similar to 2018 (10,730). Locals made up 64% of retrenchments in 2019. The re-entry rate into employment among retrenched locals improved slightly from 63% in 2018 to 64% in 2019.
  7. As employers exercised greater caution in hiring, the seasonally adjusted ratio of job vacancies to unemployed persons declined from 1.09 in December 2018 to 0.84 in December 2019.
  8. Singapore citizens continued to earn higher real incomes at the median (3.9% per annum) and 20th percentile (4.6% p.a.) in the recent five years (from 2014 to 2019), compared to the previous five years (median: 2.1% p.a., 20th percentile: 1.5% p.a.).
  9. In line with the slowdown in economic growth and strong employment growth, overall labour productivity fell in 2019 (change in real value-added per actual hour worked: -1.5%; change in real value-added per worker: -0.8%). The improvement in productivity in the Construction sector was offset by productivity declines in the Manufacturing and Services sectors. (Refer to the Appendix for more details)

    Figure 2a: Changes in Real Value-Added (VA), Employment and VA per Worker, 2015 - 2019
    Figure 2b: Changes in Real VA per Actual Hour Worked and VA per Worker, 2015 – 2019

    Labour Market Outlook for 2020
  10. Amid the ongoing COVID-19 outbreak, the Ministry of Trade and Industry (MTI) has downgraded Singapore’s GDP growth forecast for 2020 to “-0.5 to 1.5%”, with growth expected to come in at around 0.5%, the mid-point of the forecast range.
  11. As the overall economic growth is projected to moderate, the outlook for the labour market is expected to be subdued. Nonetheless, there are pockets of relative strength in the Singapore economy which will continue to provide job opportunities. For instance, the Construction sector is projected to post steady growth given the rebound in construction demand since 2018. The Information & Communications sector is also expected to remain resilient, supported by sustained demand from businesses for IT solutions as they continue to restructure and transform.

    Conclusion
  12. The labour market held up in 2019, but the outlook for 2020 is uncertain against the backdrop of global economic uncertainties and the evolving COVID-19 outbreak. The government is monitoring the labour market closely and has stepped up our support to help businesses to retain workers, and workers to reskill for new jobs. To help our workers tide over near-term challenges, the Stabilisation and Support Package, announced at Budget 2020 and amounting to $4 billion, will assist workers to retain their jobs and upgrade their skills to be ready for new opportunities when the tide turns. Enterprises will receive support for keeping workers employed, through the Jobs Support Scheme5 and enhancements to the Wage Credit Scheme.6 For sectors directly affected by COVID-19, Workforce Singapore (WSG) will launch new programmes to help employers reskill and redeploy their workers to new jobs within the company. Funding support duration for existing and new redeployment programmes in the affected sectors will be extended from three months to a maximum of six months.
  13. Beyond near-term uncertainties, there are longer-term challenges of keeping our workforce relevant as the economy transforms. MOM and WSG, together with tripartite partners, will enhance efforts to help individuals to reskill and access good jobs created.
  14. Under the SkillsFuture Mid-Career Support Package, we will be providing support for mid-career workers in their 40s and 50s by helping them stay employable and moving on to new jobs or new roles.
    1. Ramp up government reskilling programmes significantly, including enhanced salary support for mid-career rank-and-file workers during training period.
    2. Introduce hiring incentive for employers to hire and reskill jobseekers aged 40 and above through reskilling programmes.
    3. Provide additional $500 SkillsFuture Credit top-up for Singapore Citizens aged 40-60, on top of $500 SkillsFuture Credit top-up for eligible Singapore Citizens.
    4. Build a pool of volunteer Career Advisors from professional communities to provide career guidance and peer-level support.
  15. There will also be greater support for employers to undertake enterprise and workforce transformation in tandem. Workers, in particular those in their 40s and 50s, can benefit from better job opportunities when enterprises redesign and improve jobs as part of their enterprise transformation. We encourage employers to tap on the enhanced Productivity Solutions Grant when it is expanded in the second half of this year to include pre-approved job redesign consultants. The SkillsFuture Enterprise Credit of $10,000 per eligible enterprise can cover up to 90% of out-of-pocket expenses on qualifying costs for supportable enterprise and workforce transformation programmes.
  16. With the planned reduction of the S Pass sub-DRC for construction, marine shipyard and process sectors, businesses can tap on the SkillsFuture Work-Study Programme to identify suitable polytechnic and ITE graduates and defray training costs. They can also consider mid-career workers.

Appendix: Labour Productivity by Sector, 2015 - 2019

Manufacturing

Manufacturing

Construction

Construction

Services

Services

FOOTNOTE

  1. With the exception of data on GDP and labour productivity which is sourced from the Department of Statistics and the Ministry of Trade & Industry, all other data are from the Labour Market Report, 2019, Manpower Research & Statistics Department, MOM.
  2. This was revised upwards from the preliminary estimate of 55,200 reported in the Labour Market Advance Release (LMAR) 2019.
  3. This was revised upwards from the preliminary estimate of 26,500 reported in the LMAR 2019.
  4. This was revised downwards from the preliminary estimate of 3.2% reported in LMAR 2019.
  5. The Jobs Support Scheme offsets 8% of wages, up to a monthly cap of $3,600, for three months.
  6. The Wage Credit Scheme co-funds wage increases for Singaporean employees. The monthly wage ceiling will be increased from $4,000 to $5,000, and co-funding levels for qualifying wage increases given in 2019 and 2020 will be raised by five percentage points.