Singapore’s jobless rate rises slightly in Q4, likely to rise higher in 2017

Singapore’s overall jobless rate in the December quarter rose slightly. The unemployment rate edged to 2.2 percent, the highest since the fourth quarter of 2010. For residents and citizens the rate rose further to 3.2 percent and 3.5 percent respectively.

The rise in the rate was partially because of the slower business conditions, increased labor force participation and economic restructuring. But the rise in unemployment impacted residents aged 30-30 and >50, and also those with secondary and degree qualifications, implying certain churn because of economic restructuring impacts.

Total employment in the country increased 16.4k or 0.4 percent year-on-year, as compared with the rise of 32.3k in 2015. This shows the deceleration in the local labor force growth and continued tightening of the foreign workforce supply, noted OCBC Bank. There was a rise in redundancies from 4,220 in the third quarter 2016 to 5,300 in the fourth quarter. However, it is similar to a year ago. Layoffs also increased throughout the board in the sectors of manufacturing, services and construction. The number of unemployed residents came in at 67.4k in December, the highest since 2009, stated OCBC Bank.

Net employment came back in the positive territory at 1.9k in the fourth quarter, an improvement from the 2.7k jobs in the third quarter. Services led job creation in the midst of the festive season rebound in labor demand. However, this was slightly below the 21.5k witnessed in the fourth quarter 2015. In the meantime, manufacturing and services sectors continued to shed jobs in the fourth quarter by 6.8k and 8 k respectively.

Singapore’s domestic labor market is expected to continue to weaken because of sluggish domestic business conditions and an uncertain external business climate because of the continued deceleration in China and Trump’s policy uncertainties.

“This could drag the overall unemployment rate higher to around the 2.5% this year, and the net employment data could moderate further or risk another contraction in the quarters ahead. Given more cautious hiring intentions, nominal wage growth is likely to slow, and real wage growth could also stagnate with headline inflation reverting to positive territory”, said Selena Ling, dead of Treasury Research & Strategy at OCBC Bank.