Singapore labor market recovers; Unemployment rate sees a downward trend

The Singapore labor market is on its road to recovery from the ruinous ramifications it faced because of the Covid-19 pandemic, with a rise in employment rates surpassing the expectations of the market experts. The analysts commented that an increased hike in the number of Covid-19 cases forced the Singapore government to enforce stricter restrictions and tighter norms to curb the situation. According to the data released last month, the total employment surged by 12,200 in the first quarter of 2021, which surpassed the predictions of estimates of an expansion of 4,800. This is tremendous news after a steady decline in the previous four quarters.

In April this year, the rate of overall unemployment was recorded at 2.9%.  This is also a sign of relaxation as the rates of employment were far worse and lower from December 2020 to March 2021. The highest rate of unemployment was recorded in September 2020, at 4.9%.

The improvement in the unemployment rate was also observed in the case of permanent residents and Singaporeans, slumping from 4.4% in December to 3.9% in April. For citizens, this rate dropped from 4.5% to 4.1% in the same period. The retrenchments for the second consecutive quarter witnessed a sharp fall too.

Another positive trend was the rise in job vacancies. The numbers rose to 68,400 in March, which was the highest since the last upsurge of 65,500 in March 2015.

The labor market has shown an optimistic recovery but it is still not completely restored to pre-pandemic conditions. Minister said that recovery "will not be a straight road", and may run into roadblocks. The Ministry of Manpower had planned to reopen the economy in the midst of Covid-19 but the second wave brought all plans to a standstill. Before the impositions of lockdowns, the government was slowly relaxing the Covid-19 protocols, allowing 8 people in the social gatherings or restaurants and opening up workplaces with some capacity limitations. But as Covid-19 cases started increasing, work from home was the only option and dining in restaurants was banned.

People who recently traveled to Bangladesh, India, Sri Lanka, Pakistan, and Bangladesh were barred from entering Singapore. The work pass holder’s entry applications from high-risk countries were not accepted.

Chua Hak Bin, Maybank Kim Eng senior economist, said that Singapore's labor market recovery might have impeded in the second quarter due to the COVID-19 restrictions.

"Resident employment may have risen further in the second quarter but may have been offset by a fall in non-resident employment. Sectors more dependent on South Asian workers, such as construction, marine, and processing, were probably disproportionately impacted," he added.

"Some of the faster-growing modern service sectors, such as finance and info-communications, probably saw weaker employment growth in the second quarter," he said.

Selena Ling, OCBC Bank's chief economist and head of treasury research, assumes that the consequences or implications of the tightened restrictions between May and June will likely be "minor rather than major". She observed that the duration of the curbs was relatively short. The Government initiated wage support schemes to companies and firms which were affected by the curbs.

"What may be more of a concern down the road is whether business confidence will normalise further and ramp up capital expenditure and hiring plans," said Ms. Ling. There is also the issue of whether such plans "can reabsorb the temporary employment - of swabbers, temperature checkers, social distancing ambassadors and so on” - which would subside with time and as vaccination targets are met.