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Labour Market, First Quarter 2007

The Labour Market Continues to Tighten as Demand for Manpower Rises


Employment prospects continued to strengthen, attracting more people to enter the labour market which in turn resulted in a rise in unemployment. As earnings continued to grow, wage pressures have risen while productivity declined for the second successive quarter. At the same time, retrenchments have reduced substantially.

2.   Total employment grew by 49,400 in Q1 07, supported by the healthy economic performance. Although this fell below the seasonally high gains of 51,500 in Q4 06, it surpassed the 45,000 in Q1 06.

3.   The seasonally adjusted overall unemployment rate was 2.9%P in Mar 07, an increase from 2.6% in Dec 06. Similarly, the resident1 unemployment rate rose to 4.0%P in Mar 07 from 3.6% in Dec 06. The rise in unemployment rate was driven by more people entering the labour market on the back of favourable economic conditions2. An estimated 66,000 residents were unemployed in Mar 07. The seasonally adjusted figure was 77,000.

4.   Notwithstanding the rise in unemployment, the number of long-term unemployed remained stable. About 10,100 residents or 0.5%P of the resident labour force were unemployed for at least 25 weeks in Mar 07, same as a year ago. The last time that the resident long-term unemployment rate for March periods is lower than this was in Mar 98 (0.4%).

5.   A total of 1,964 workers were retrenched in Q1 073 which is substantially lower than the 3,215 retrenched in the previous quarter and 3,653 in the same quarter a year ago. Based on CPF records, 59% of the residents retrenched by the private sector establishments (each with at least 25 employees) in Q4 06 were re-employed by Mar 07 (within 6 months after retrenchment). This is slightly higher than the 58% in Mar 06, but lower than the 62% posted by the previous cohort in Dec 06.

6.   The buoyant economy continued to generate a large number of job vacancies, reaching 32,200 in Mar 073. This is 30% higher than a year ago (24,800), but is broadly unchanged from Dec 06 (32,000).

7.   Average nominal earnings based on CPF records posted a strong year-on-year increase of 5.5% in Q1 07, higher than the 3.1% in the preceding quarter. After adjusting for inflation, the increase in real terms was 5.0% and 2.5% respectively.

8.   Overall labour productivity fell by 1.6% over the year in the first quarter. This is the second consecutive quarterly decline in productivity after the contraction of 0.7% in Q4 06. This has resulted because the pace of employment creation outweighed the growth in output, as employers continued to hire to meet current and anticipated increases in output. The decline in productivity led to a rise in overall unit labour cost (ULC) of 5.4% in Q1 07, following a near standstill (0.1%) in the previous quarter.

9.   In summary, the labour market continues to tighten as demand for manpower rises in response to the growing economy. As employers hire to cope with current and anticipated increases in output, productivity has declined for the second successive quarter while wage pressures have continued to rise.

For More Information

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

p  preliminary

1 Refers to Singapore Citizens and Permanent Residents.

2 The rise in unemployment rate was driven by an increase in labour supply.  The resident labour supply is estimated to have increased by 17,700 in Q1 07.  This is higher than the average increase over the last two years, when favourable economic conditions also led to an increase in resident labour supply in the first quarter but by a lower average of 10,700.  In contrast, in earlier years the resident labour supply typically shrinks in the first quarter from the seasonally high gains at year-end – on average, it shrank by 11,700 in the first quarter of 2001 to 2004.

3 Data pertain to private sector establishments (each with at least 25 employees) and the public sector.