16 March 2012, The Business Times
(SINGAPORE) The rise in job losses in the last quarter of 2011 turned out to be smaller than flash estimates, but the 3,250 redundancies in Q4 remained the highest that the quarterly number has been since second quarter 2009.
Thanks to strong employment growth, however, the final labour market report released by the Ministry of Manpower yesterday confirmed a 2011 unemployment rate of 2 per cent, Singapore's lowest in 14 years.
The economy added 37,600 jobs in Q4, up from January's estimate of 36,300 and more than the 33,900 jobs created in Q4 2010. This yielded a 3.9 per cent rise in total employment for 2011, marginally above jobs growth in 2010.
There were also hints in Q4 of labour demand picking up. Job vacancies rose a seasonally adjusted 13 per cent over the three months - reversing a 13 per cent drop over Q3 - to 51,700 openings in December last year. This was 17 per cent more job openings than were available a year ago. It also meant that there were 1.18 job vacancies for every unemployed person in December, up from 1.15 in September but still some way from the recent peak of 1.39 in March last year.
Citigroup economist Kit Wei Zheng said this 'tells us that labour demand may be edging up in tandem with the bottoming out in GDP'. Putting the rise in Q4 layoffs in perspective, Barclays Capital economist Leong Wai Ho said: 'There were retrenchments in manufacturing and the financial sector. But the outlook for the industries are improving. There remains excess demand for workers in the economy - across skill levels. This reflects supply constraints as well as skills mismatch.'
Strong demand for manpower over the year quickened the expansion of the foreign workforce here. Excluding foreign domestic workers, the number of foreign workers rose 8.8 per cent to make up 32.8 per cent of the workforce by the end of last year, accelerating from the 6.3 per cent gain in 2010.
UniSIM labour economist Randolph Tan thinks this 'simply confirms why further quota restrictions' had to be rolled out in this year's Budget, in addition to ongoing hikes in foreign worker levies Singapore rolled out to curb its reliance on foreign workers.
Mr Kit believes that part of the jump last year could be due to a 'temporary relaxation' after the elections to compensate for pre-election tightening. 'There was a lot of unfulfilled pent-up demand for labour that had to be accommodated in the short term, in the absence of productivity being able to provide a sufficient offset,' he said.
Labour productivity growth plunged to one per cent last year amid slower GDP growth and strong jobs creation, from 11 per cent in 2010. But such volatility is to be expected of a measure that tracks output per worker, so observers say any productivity gains need to be assessed over a longer period. 'Although job creation is expected to slow this year, so will growth, thus productivity growth may not see much of an improvement,' said Mr Leong.
Construction, a sector whose productivity lags behind global peers, added slightly fewer jobs last year than earlier estimated. But the 22,000 net new jobs added for work on large public projects were still more than six times the 3,400 construction jobs created in 2010. Services created 96,100 of the 122,600 net new jobs last year, while manufacturing employment rose 3,400 after shedding 1,400 jobs in Q4.
'The construction sector needs time to change work processes before it can start using labour more efficiently and attract local participation,' said Mr Leong, who expects the sector's employment to grow this year, in view of the recent rise in land sales, though at a slower pace.
Unit labour cost continued to rise 1.7 per cent in Q4, MOM's report said, bringing the full-year increase to 3.4 per cent. But Mr Tan sees reason for optimism in the continued decline in Singapore's unit labour cost for manufacturing relative to 16 other economies, a measure of cost competitiveness.
And while the tight labour market pushed average monthly wages 6 per cent higher last year, a faster gain than 2010's 5.6 per cent, inflation eroded most of this gain. Real average wages rose 0.7 per cent, down from the 2.7 per cent gain in 2010. In Q4, real average wages fell 1.4 per cent as inflation outstripped gains in average monthly earnings.
The the final labour market report is available here.