Among those retrenched, professionals, managers, executives and technicians (PMETs) continued to form the majority at 69 per cent. — TODAY pic
SINGAPORE, June 14 — More workers were retrenched in the first quarter of this year compared to the previous quarter and a year ago, the Ministry of Manpower (MOM) said in a report released yesterday.
The increase was driven by manufacturing and affected workers in production and electronics, the ministry’s latest labour report said.
And after seven consecutive quarters — or close to two years — of increases, the number of job vacancies declined in the first quarter of this year, from 62,300 last December to 57,100 in March this year.
Here are the key findings from the report:
Retrenchments rose
What this means: Economists pointed out that the escalating trade war between the United States and China has hit the manufacturing sector head on. It does not help that Singapore’s electronics cluster has been on a downcycle in the past year and is already in the “contraction” territory.
So, to reduce costs, companies have to trim headcount, they added.
Senior economist Irvin Seah with DBS bank also noted that the push to get manufacturing companies to leverage technology to automate processes has indirectly resulted in layoffs simply because they do not need manpower.
Maybank Kim Eng’s economist Chua Hak Bin said that the trade war has hit the electronics supply chains, especially those that rely heavily on China’s market. And this disruption will likely worsen in the coming months as the US’ export controls for suppliers to China’s technology companies will add another layer of disruption.
Job vacancies declined
What this means: Seah from DBS said that the rise in retrenchment, coupled with the easing demand for labour signals one thing — the start of a downcycle in the labour market, which he expects to worsen in the coming months unless there is respite in the economy.
When the labour market is in a downcycle, PMETs will be the hardest hit as they form the bulk of the labour sector, he added. Lower-skilled workers will be spared in such a scenario since the Government has tightened the inflow of migrant workers over the years.
“There are safeguards for lower-skilled workers, but not so much for PMETs,” Seah said.
Saying that there is a likelihood of slow employment growth, Chua pointed out that stricter dependency ratio ceilings for the services sector from 2020 could dampen labour demand in areas such as retail trade, hospitality as well as food and beverage.
Song Seng Wun, an economist with CIMB Private Banking, said that though the latest survey by the Monetary Authority of Singapore (MAS) shows economists downgrading Singapore’s 2019 growth forecast — it is to increase by 2.1 per cent this year, a slower pace than the 2.5 per cent growth forecast in the March survey — it still indicates a possible soft growth in the second half of this year.
But if the trade war worsens, the possibility of a soft growth might “fail to materialise”. “Then the labour market will soften further. Demand for labour will continue to ease,” he added.
Total employment growing
What economists say of job market outlook
Irvin Seah (DBS): “There will definitely be a slowdown in employment in the near term. The labour market outlook very much depends on the outcome of the trade war. For the Singapore Government, it already provides support to those retrenched but it needs to be prepared to step up its efforts.”
Chua Hak Bin (Maybank Kim Eng): “Companies will be more cautious about hiring for the rest of the year, given the escalating US-China trade war. Employment growth will likely slow, while manufacturing employment will likely remain in contraction for the rest of the year.”
Song Seng Wun (CIMB): “Slower employment growth is likely and companies will be more selective when it comes to hiring. For domestic-oriented services relating to social services, IT security or e-payments, there could be a modest labour demand. But for those highly dependent on trade, they will find it more challenging to make jobs available.” — TODAY