Singapore
By Tang See Kit 28 Apr 2021 12:00PM (Updated: 28 Apr 2021 12:12PM )
SINGAPORE: Singapore’s labour market is expected to continue recovering “at a steady pace” this year alongside the economy, with “most of the job gains accruing to residents”, the Monetary Authority of Singapore (MAS) said on Wednesday (Apr 28).
As such, the resident unemployment rate should decline steadily throughout the year, although “some lingering slack” could persist due to labour market mismatch and underemployment, said MAS.
Accordingly, wage growth is projected to remain relatively muted this year.
ALREADY IN RECOVERY
In its latest half-yearly macroeconomic review, the MAS wrote that local labour market conditions have improved alongside a pick-up in overall economic activity.
It cited how the contraction in total employment moderated significantly to 7,800 on a quarter-on-quarter basis in the final three months of 2020, from 34,400 in the preceding quarter.
“The smaller decline in overall employment reflected robust growth in the domestic-oriented services sector, as well as the moderation of job losses in the travel-related, trade-related and construction sectors,” the central bank said.
It also noted a continued strong recovery for resident employment in the same quarter, aided by policies such as the Jobs Support Scheme. Border controls have also led to hiring constraints and “likely encouraged firms to hire resident workers for some roles that might have been filled by foreign workers in the past”, it added.
Data released last month by the Manpower Ministry showed that foreigners accounted for all of the decline in total employment last year .
Foreign headcount fell by 195,900, or nearly 14 per cent, in 2020. Almost 80 per cent of that was borne by work permit holders amid significant declines in employment in the construction, domestic work and manufacturing sectors, the MAS said in its report.
The central bank expects resident employment “to expand more strongly than foreign employment this year”, given continuing policy support for residents such as the Jobs Growth Incentive and restrictions on international travel.
Already, the resident unemployment rate has eased further to 4.1 per cent in February, compared with the peak of 4.8 per cent in September last year.
“Robust demand for resident workers should lead to a steady decline in the resident unemployment rate over the year and encourage local job seekers to enter (or re-enter) the labour force,” said the MAS, adding that more flexible working arrangements, including work-from-home, could facilitate a further increase in resident labour force participation.
Overall, the domestic labour market should continue to recover at a steady pace in the quarters ahead, with recent business expectation surveys indicating improved hiring sentiment, the central bank wrote.
However, total employment “may not recover completely to pre-COVID levels in the near term”.
This is because labour demand in some parts of the economy “has likely shifted structurally lower”, especially with the adoption of automation and digitalisation initiatives by firms during the pandemic.
The pandemic may have also accelerated the economy’s shift away from low productivity sectors to those that have a higher value-add per worker and strong growth prospects in a post-pandemic world, MAS added.
MARKET SLACK TO PERSIST, MUTED WAGE GROWTH
Even with the recovery, a moderate amount of labour market slack could persist until the end of this year.
There are two reasons for this, according to the central bank.
First, the likelihood of “some matching frictions” in the hiring of displaced workers. The inability to transition to full-time positions by those in short-term jobs, traineeships or company attachments, if any, would also add to the number of unemployed workers.
Second, time-related underemployment remained high at 4.1 per cent in the fourth quarter of 2020. This suggested that a significant number of resident workers are “involuntarily employed in part-time positions”.
An individual is considered time-related underemployed if he is working part-time but is willing and able to engage in additional hours of work.
“Even as the resident unemployment rate declines, residents working less hours than desired or in positions that significantly underutilise their capabilities will contribute to underlying labour market slack, thus also capping wage growth this year,” MAS said.
As such, the central bank is projecting wage growth to remain relatively muted in 2021,
Specifically for residents, wage growth is expected to rise “only slightly” from last year’s 1.4 per cent, in part reflecting a lagged response to improving labour conditions, said MAS.
Lingering economic uncertainties and weakened corporate balance sheets are also expected to cap the pace of increase in resident wages.
MAS also said a rebound in productivity should temper some of the increase in effective labour costs to businesses, even as wage subsidies that have sharply lowered unit labour costs taper off over the year.
Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram
Source: CNA/sk
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MAS sees continued ‘steady’ recovery in labour market, resident unemployment rate to fall further
Office workers at Raffles Place in Singapore. (File photo: Jeremy Long)By Tang See Kit 28 Apr 2021 12:00PM (Updated: 28 Apr 2021 12:12PM )
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SINGAPORE: Singapore’s labour market is expected to continue recovering “at a steady pace” this year alongside the economy, with “most of the job gains accruing to residents”, the Monetary Authority of Singapore (MAS) said on Wednesday (Apr 28).
As such, the resident unemployment rate should decline steadily throughout the year, although “some lingering slack” could persist due to labour market mismatch and underemployment, said MAS.
Accordingly, wage growth is projected to remain relatively muted this year.
ALREADY IN RECOVERY
In its latest half-yearly macroeconomic review, the MAS wrote that local labour market conditions have improved alongside a pick-up in overall economic activity.
READ: Singapore economy may grow more than 6% this year, but recovery will be ‘disparate’ across sectors: MAS
It cited how the contraction in total employment moderated significantly to 7,800 on a quarter-on-quarter basis in the final three months of 2020, from 34,400 in the preceding quarter.
“The smaller decline in overall employment reflected robust growth in the domestic-oriented services sector, as well as the moderation of job losses in the travel-related, trade-related and construction sectors,” the central bank said.
It also noted a continued strong recovery for resident employment in the same quarter, aided by policies such as the Jobs Support Scheme. Border controls have also led to hiring constraints and “likely encouraged firms to hire resident workers for some roles that might have been filled by foreign workers in the past”, it added.
Data released last month by the Manpower Ministry showed that foreigners accounted for all of the decline in total employment last year .
READ: Singapore's sharpest fall in employment in more than 20 years borne by non-resident workers: MOM
Foreign headcount fell by 195,900, or nearly 14 per cent, in 2020. Almost 80 per cent of that was borne by work permit holders amid significant declines in employment in the construction, domestic work and manufacturing sectors, the MAS said in its report.
The central bank expects resident employment “to expand more strongly than foreign employment this year”, given continuing policy support for residents such as the Jobs Growth Incentive and restrictions on international travel.
Already, the resident unemployment rate has eased further to 4.1 per cent in February, compared with the peak of 4.8 per cent in September last year.
“Robust demand for resident workers should lead to a steady decline in the resident unemployment rate over the year and encourage local job seekers to enter (or re-enter) the labour force,” said the MAS, adding that more flexible working arrangements, including work-from-home, could facilitate a further increase in resident labour force participation.
READ: Foreign workers may not return to Singapore in same numbers as before, say economists
Overall, the domestic labour market should continue to recover at a steady pace in the quarters ahead, with recent business expectation surveys indicating improved hiring sentiment, the central bank wrote.
However, total employment “may not recover completely to pre-COVID levels in the near term”.
This is because labour demand in some parts of the economy “has likely shifted structurally lower”, especially with the adoption of automation and digitalisation initiatives by firms during the pandemic.
The pandemic may have also accelerated the economy’s shift away from low productivity sectors to those that have a higher value-add per worker and strong growth prospects in a post-pandemic world, MAS added.
READ: Wanted: Nurses, IT professionals - but why aren't these jobs filled?
MARKET SLACK TO PERSIST, MUTED WAGE GROWTH
Even with the recovery, a moderate amount of labour market slack could persist until the end of this year.
There are two reasons for this, according to the central bank.
First, the likelihood of “some matching frictions” in the hiring of displaced workers. The inability to transition to full-time positions by those in short-term jobs, traineeships or company attachments, if any, would also add to the number of unemployed workers.
Second, time-related underemployment remained high at 4.1 per cent in the fourth quarter of 2020. This suggested that a significant number of resident workers are “involuntarily employed in part-time positions”.
An individual is considered time-related underemployed if he is working part-time but is willing and able to engage in additional hours of work.
“Even as the resident unemployment rate declines, residents working less hours than desired or in positions that significantly underutilise their capabilities will contribute to underlying labour market slack, thus also capping wage growth this year,” MAS said.
READ: Commentary: The gig economy – a surprise boost from the pandemic and in Singapore, it’s not going anywhere
As such, the central bank is projecting wage growth to remain relatively muted in 2021,
Specifically for residents, wage growth is expected to rise “only slightly” from last year’s 1.4 per cent, in part reflecting a lagged response to improving labour conditions, said MAS.
Lingering economic uncertainties and weakened corporate balance sheets are also expected to cap the pace of increase in resident wages.
MAS also said a rebound in productivity should temper some of the increase in effective labour costs to businesses, even as wage subsidies that have sharply lowered unit labour costs taper off over the year.
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Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram
Source: CNA/sk
Continue reading...