Singapore Labor Market Faces Gloomy Outlook
- May 16, 2016
- Posted by: admin
- Category: Economics, National News
Back in December 2015, recruitment agents in Singapore had predicted a slowdown in the country’s job market. While the impact of the slow economy on recruitment was just modest in Q4 2015, the same cannot be said for Q1 2016. A report by Monetary Authority of Singapore (MAS) predicts demand for labor will remain permanently lower in 2016. The report has sent jitters in the job market and it comes against the backdrop of a sluggish economy precipitated by weak external growth.
Matching Skills to Demand
The report by MAS says unemployment is expected to rise in 2016 as companies restructure to offset effects of redundancy that had emerged in Q4 2015. The increasing skill mismatches coupled with a stagnating economy will provide an ideal ground for companies to lay off workers.
“The number of unfilled job openings shrank in 2015 and the ratio of vacancies to the unemployed decreased. With increased redundancy levels, companies now have more reason to lay off workers, which will deteriorate the already unstable labor market,” the MAS macroeconomic review noted.
Gloomy Economic Outlook
In Q4 2015, ScienTec Consulting had predicted slowdown in hiring due to the volatile global market and this has come to pass. The review by MAS has highlighted the role of external markets on the labor market in its latest release especially the stock slump in China and falling oil and gas prices.
With Monetary Authority of Singapore (MAS) already having revised its growth 2016 forecast down to 1.8% from 2.2%, companies are increasingly finding their margins under strain. Restructuring of the personnel remains one of the top cost cutting techniques that will again affect the labor market.
The review by MAS also notes that resident Professionals, managers, executives and technicians (PMETs) find it increasingly hard to re-enter the workforce. Only 48% of residents PMETs re-enter the workforce within 6 months. Transport and production operators, laborers and cleaners have a re-entry level of 53% while clerical sales and service workers enjoy a re-entry level of 63%.
With decreases demand for labor in the Singapore economy, the hitherto buoyant wage trend will moderate. In 2015, for instance, the annual wage growth fell to 3.5% and this trend is expected to continue in 2016.
With the economy slowing down, labor demand and supply will level out. The forecast for labor demand is expected to remain subdued even as the economy responds to policy easing measures initiated by the central bank.