SINGAPORE – The heightened Covid-19 restrictions in May and June to curb Covid-19 infections have taken a toll on Singapore’s labour market.
The number of workers employed fell in the second quarter of this year, after registering its first increase in the previous quarter following a decline last year, said the Ministry of Manpower (MOM) on Friday (July 30).
Its report of preliminary estimates for the labour market in the second quarter showed that total employment, excluding migrant domestic workers, contracted by 15,700.
This comes as resident employment grew only modestly due to earlier phase two (heightened alert) measures from May 16 to June 13 and their impact on domestically oriented sectors. This slower growth was not enough to offset the steep decline in non-resident employment as a result of ongoing curbs on the inflow of foreign workers.
The modest resident employment growth was attributed to declines in domestically oriented sectors that were more directly impacted by the stricter measures, such as the food and beverage services and retail trade, said the report.
On the other hand, resident employment continued to rise steadily for outward-oriented sectors such as information and communications and professional services, as well as in community, social and personal services.
Non-resident employment declined more sharply across most sectors, as workers who have left were not replaced due to border curbs.
MOM did not provide specific figures on the breakdown of employment changes for residents and non-residents in the advance labour market report. More details will be shared in the fuller second quarter report in September.
Unemployment rates eased further last month, though they remained elevated compared with pre-pandemic levels, said MOM. Singapore’s unemployment rate peaked in September last year, before falling steadily since last November.
The overall unemployment rate fell to 2.7 per cent, from 2.8 per cent in May. The resident unemployment rate, which covers Singapore citizens and permanent residents, declined to 3.7 per cent, from 3.8 per cent in the preceding month.
Unemployment among Singapore citizens dropped to 3.8 per cent last month, from 4 per cent previously.
The number of unemployed residents fell to 86,600 last month, from 95,500 in March.
Meanwhile, retrenchments rose slightly to 2,500, from 2,270 in the previous quarter. This was largely due to an uptick in layoffs in the manufacturing and construction sectors.
Companies cited restructuring or business downturn within their industry as common reasons for the layoffs, said MOM, which has not observed any notable increases in retrenchments in sectors directly impacted by the tighter restrictions, such as F&B.
The tighter measures, as well as rising Covid-19 infections due to the highly contagious Delta variant globally, also dampened hiring sentiments.
About 64 per cent of companies polled by MOM last month said they had plans to hire, down from the 73 per cent in March. About one in three firms indicated their intention to raise wages within the next three months.
On Friday, Manpower Minister Tan See Leng said Singapore’s return to phase two (heightened alert) as well as ongoing restrictions to the inflow of migrant workers are expected to “weigh on the pace and evenness of recovery for the labour market”.
Dr Tan also called on affected businesses to press on with their transformation efforts and reskill workers.
Some experts noted that while the latest MOM data is encouraging, it is unlikely that the labour market will recover to pre-pandemic levels soon.
Mr Samuel Gan, senior vice-president for capital markets at digital securities exchange ADDX, expects unemployment to continue trending lower in the second half of the year but still remain above pre-Covid-19 levels, as Singapore achieves its vaccination targets and further eases restrictions.
“However, the impact of the Delta variant and the expiry of government support measures in the coming quarters present downside risks to the employment outlook,” he added.
Maybank Kim Eng economist Chua Hak Bin said: “The growth recovery may run out of steam in the second half if hiring continues to be hindered by heightened measures and stricter border controls.”