Sunday 17 June 2012

Jobless rate inches up to 2.1% in March

First quarter labour report also shows there are fewer job vacancies
By Toh Yong Chuan, The Straits Times, 16 Jun 2012

SOME 64,000 workers were jobless in March, as the unemployment rate rose slightly to 2.1 per cent in the first quarter of this year.

There were also fewer job vacancies - 50,000 in March - against the backdrop of a softening labour market, the Ministry of Manpower said when it released its first-quarter labour market report yesterday.

While the ministry said manpower shortages have eased, some economists worry that structural changes to the economy could make it harder for those out of work to re-enter the workforce.

According to the report, total employment rose by 27,200 to 3,255,700 in March, even as the unemployment rate crept up to 2.1 per cent that month from 2 per cent in December last year.

Of the 64,000 people out of work in March, up from 60,500 in December, four in 10 were aged above 40.

With higher unemployment and fewer job openings - 50,000 in March versus 55,400 in December - there were fewer jobs available for every jobless person last quarter. For every 100 job-seekers, there were 105 jobs in March, down from 120 in December, the ministry said.

The report will bring some relief to businesses that have been struggling with an acute labour shortage for some time now, but economists that delved deeper into the numbers had mixed reactions.

Singapore Management University economics professor Hoon Hian Teck said the labour market held up rather well in the first quarter, despite the general weakness of the United States economy and euro zone troubles.

He attributed the holding back on hiring to the fact that companies are cautious and uncertain about how the future will unfold.

But DBS economist Irvin Seah said the report is worrying. 'There are signs that this is only the start of difficult structural changes to the economy,' he said, singling out the higher long-term unemployment rate as a cause for worry.

Among those jobless, nearly one in five - or 14,000 - had been looking for work for at least six months, up from 11,800 a year ago, according to the ministry.

'More can be done to help this group acquire the skills to fill the job vacancies,' said Mr Seah.

Writing in his blog yesterday, Minister of State for Manpower Tan Chuan-Jin said his ministry and the Singapore Workforce Development Agency are already paying attention to those who face long-term unemployment.

He pledged more help for them so they can pick up new skills to take up jobs in the same or different industries.

On the outlook ahead, UniSIM Associate Professor Randolph Tan said a slowdown in employment for the rest of the year, and probably into the next, can be expected.

'Employment has already passed its peak in the fourth quarter of last year,' he said.

SMU's Prof Hoon said the euro zone crisis, if unresolved, would have a negative impact on Singapore's labour market.

But while more people may be seeking work, Mr Chan Chong Beng, president of the Association of Small and Medium Enterprises, said most SMEs still face difficulties finding workers 'because some still shun work in the sector'.

'We have to either bite the bullet to restructure and boost productivity, or be prepared to ship out,' he said of the efforts to ride out the uncertain economic situation.

Labour productivity continues to slide; experts divided over the impact
By Toh Yong Chuan and Janice Heng, The Straits Times, 16 Jun 2012

LABOUR productivity continued to contract in the first quarter of this year, sliding 2.2 per cent.

This is the second worst quarterly showing in almost three years, and continues a contraction which began in the last quarter of last year, when labour productivity fell 0.5 per cent.

Productivity dipped in both the manufacturing and services sectors. Together, they employ nearly nine in 10 workers in the labour force.

The numbers may seem dire in the light of the country's recent push for higher productivity, but economists said the poor performance was more likely simply the result of economic output falling in the last quarter.

The current method of measuring labour productivity is to divide the country's GDP by the total number of workers.

Singapore Management University economics professor Hoon Hian Teck felt the dip in productivity could be because companies are still holding on to their workers even though sales have fallen.

The companies are avoiding retrenchments in case slower sales is temporary, he said.

UniSIM Associate Professor Randolph Tan said the decline is a temporary blip arising from current changes in the labour market, with the Government tightening the influx of foreign workers while trying to boost the productivity of local workers.

'There is no reason for the poor performance to persist in the long term, once the labour market situation - specifically relating to foreign manpower numbers - stabilises in the longer term,' said the professor.

But others were not so sanguine.

'This clearly means that we must really step up the productivity drive so that workers can get higher and sustainable pay rises through productivity gains,' said DBS economist Irvin Seah.

While it is all right for the Government to set productivity targets and measure them, it is more important for productivity improvements to translate to sustainable income increases for workers, he said.

So, he is more concerned about another finding in the Ministry of Manpower's latest report - that the real average earnings of workers fell by 3.9 per cent in March, after inflation eroded the meagre 0.9 per cent increase in average monthly wages.

Inflation soared to 5.4 per cent in April, due to higher car prices and accommodation costs.

MP for Bishan-Toa Payoh GRC Zainudin Nordin agreed. 'The slip in labour productivity is a wake-up call that our drive to boost workers' pay through higher productivity is not going to be easy,' said the chairman of the Government Parliamentary Committee for Manpower.

The only sector that bucked the overall trend was the construction sector, which saw an increase of 1.2 per cent in labour productivity in March.

The increase did not surprise Dr Ho Nyok Yong, president of the Singapore Contractors Association. 'We were expecting the increase because in the past few years, our members have been working on their productivity,' he said.

This year, the association and the Building and Construction Authority started running productivity clinics for smaller contractors, where they sit down with individual members and talk them through the challenges they face in raising productivity.

When asked whether the construction sector can keep up the productivity growth, Dr Ho replied: 'I am optimistic, but you cannot expect a big jump.'


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