Unemployment rate up despite strong job growth in Second Quarter 2013

By Janice Heng, The Straits Times, 1 Aug 2013

UNEMPLOYMENT rose to 2.1 per cent and more workers lost their jobs in the second quarter of the year, even as employment growth stayed strong, according to a Manpower Ministry (MOM) report released yesterday.

Economists said the labour market remains tight - perhaps even too tight, with Acting Manpower Minister Tan Chuan-Jin stressing the need for job growth to slow.

In a Facebook post, he wrote: "We need to moderate employment growth to a more sustainable pace, and encourage companies to move towards manpower-lean growth."

Employment grew by 32,500 in the second quarter - more than in the quarter before (28,900) and the same period last year (31,700).

This brought total employment to 3.4 million in June, 4 per cent up from a year ago.

That growth rate is more than double the Government's target of 1 to 2 per cent for the decade, noted Mr Tan. "As you can see, our businesses are still relying too heavily on labour."

Yet unemployment also rose. The seasonally adjusted unemployment rate was 2.1 per cent in June, up from 1.9 per cent in March.

The resident unemployment rate rose to 3 per cent from 2.9 per cent before, and the citizen unemployment rate to 3.1per cent from 2.9 per cent before.

Layoffs also went up. There were 2,900 workers losing their jobs, higher than in the quarter before and the same period last year.

In its report, MOM said that the tight labour market showed signs of easing as layoffs rose.

But experts disagreed, pointing to different labour market conditions across economic sectors.

"A rise in unemployment in certain sectors does not translate to an easing in the labour market in other sectors," said Mr Mark Hall, vice-president and country general manager of recruitment firm Kelly Services.

Services drove the rise in employment growth (21,700), with manufacturing and construction seeing slower growth instead.

Layoffs also fell in services, and job losses were instead led by manufacturing.

This mismatch in demand and supply across sectors means that the labour market is tight even though unemployment rose, said Barclays economist Joey Chew.

In his Facebook post, Mr Tan said more redundancies can be expected as Singapore's economy restructures. Job creation, training and job matching will thus be important, he added.

On restructuring, UniSIM economist Randolph Tan worried that strong employment growth might hamper productivity. He said the only good news is that the second quarter's high GDP growth - 3.7 per cent - should still mean an improvement in productivity.

Beware job-skill mismatch: Lim Swee Say
Labour chief calls on firms, workers to tackle structural unemployment
By Toh Yong Chuan, The Straits Times, 3 Aug 2013

STRUCTURAL unemployment may rise in Singapore and requires the special attention of companies and workers, warned labour chief Lim Swee Say.

The mismatch between jobs created and the skills needed to do them is harder to fix than the seasonal job churn in the labour market, he said yesterday.

And a developed economy like Singapore faces a greater threat of it happening, said the secretary-general of the National Trades Union Congress.

"Structural unemployment affects workers at all levels, including professionals, managers and executives (PMEs)," he added. "It doesn't matter whether you are young or old, rank and file or PMEs."

Mr Lim's comments came two days after the Manpower Ministry released data that showed unemployment rising in the second quarter of the year even as more jobs were created.

He noted that the mismatch between jobs and skills can happen in all sectors, and called on workers and employers to work together with unions and the Government to tackle it.

Workers should be adaptable and keep upgrading their skills, while firms can tap government schemes to raise their productivity to create better jobs, he said.

The labour movement sounded the alarm bells even as it kicked off a series of 23 National Day celebrations at the former Singapore Conference Hall.

In his written National Day message to unionists, Mr Lim pointed out that many countries face the problems of youth unemployment, inadequate pay rises for working adults and dwindling retirement funds for retirees - what he calls the problem of "three not enough".

Singapore is spared this triple whammy, with low unemployment, steady wage gains and a rising re-employment age.

But the country faces its own challenges, he noted.

"Besides countering the global threat of 'three not enough', we also have to tackle the issues of a widening income gap, an ageing workforce and the potential rise in structural unemployment."

He laid out some areas where Singapore must do better. One of them is transforming the economy to be more productive, even if it means slower growth.

It is better to grow at 3 per cent a year with productivity gains of 2 per cent, than at 4 per cent a year but with productivity gains of just 1 per cent, he said.

Companies facing labour shortages and rising business costs must become "leaner, greener and cleverer", he added.

But even as it looked forward, the NTUC retraced its history with a display of 48 old photographs at the former Singapore Conference Hall, where the union movement first started in 1961.

NTUC's youth chapter member Clarence Ngoh was one of the unionists who enjoyed looking at the old pictures.

Said the 20-year-old full-time national serviceman: "I am a nostalgic person, so old pictures remind me of how far the NTUC and Singapore have progressed."