Fewer workers employed for 1st time in 6 years
THE job market shed workers for the first time in six years, strangled by a tight foreign-worker policy and slow growth.
Employment for the first three months of the year contracted in both the manufacturing and construction sectors, while services put in its worst performance in at least a decade.
Employment fell by 6,100 at the end of March, according to the latest official figures from the Ministry of Manpower (MOM), bringing the total number of workers here down to 3,617,800.
The last time the economy saw such poor job market performance was in the second quarter of 2009, when 7,700 workers were lost.
Even as employment contracted, unemployment - at 1.8 per cent - stayed near record lows while vacancies remained near all-time highs, said the report released yesterday.
The seasonally adjusted unemployment rate for citizens also declined to 2.6 per cent, or around 50,200 people, compared with 2.7 per cent in December.
Economists said this paradox - shrinking employment in a tight labour market - is partly the result of falling numbers of workers in the economy.
"You can have a job opening but you have to have someone to actually fill the position for employment numbers to go up," said Nanyang Technological University Assistant Professor Walter Theseira.
DBS economist Irvin Seah pointed to the restrictive foreign worker policy, noting that it has restrained companies from hiring people they need.
With the economy pushing the limits of labour-force participation, it is harder than ever for employers to offer wages or jobs that would attract still more locals to work or look for work.
While this could continue to push wages up and keep unemployment low, economists also warn that, should the trend continue, companies could start to suffer, which could have an impact on growth itself.
The decline in employment was led by the services sector, which saw a 90 per cent drop in the number of additional workers employed, the MOM report said.
Demand for labour also slackened in some industries. Weak output growth in marine and offshore engineering, and the completion of chemical maintenance projects resulted in 6,900 fewer people employed in manufacturing last quarter.
MOM added that, apart from industry-specific factors, the contraction "may be reflective of how segments of the economy could be transiting to be less manpower-reliant".
Economists noted that it is too early to say whether there was cause for alarm.
"It's premature to attribute this to a recession risk because vacancy numbers are so high and unemployment is so low," said Mr Seah.
The report also showed that layoffs were slightly lower than in the previous quarter. In the first quarter of the year, 3,500 workers lost their jobs, compared with 3,910 who did so in the fourth quarter of last year.
The majority of residents - nearly three in four - who were laid off were professionals, managers, executives and technicians (PMETs).
Vacancies also dropped off slightly. The seasonally adjusted number of vacancies last quarter was 65,300, near the record high of 65,500 seen in the previous quarter. Close to half of the vacancies last quarter were for PMETs.
SIM University economist and Nominated MP Randolph Tan said that the labour market is adjusting, with employers being more discerning about whom they hire.
"Any worker they hire from now on must be assessed on how much they contribute to the bottom line," he said.