Job losses double to 12,400

Job losses double to 12,400
By Sue-Ann Chia

THE job market shows signs of improvement but for one surprise blip: The number of jobs wiped out between April and June this year has doubled to 12,400.

‘The most important message is to remind all of us that the worst is not yet over.’

With this increase, Singapore is facing for the first time a situation it last encountered in the 2003 recession: a drop in employment level for two quarters in a row.

In all, Singapore lost 18,800 jobs in the first half of this year, according to preliminary employment figures released by the Ministry of Manpower (MOM) yesterday.

The loss of jobs is a dramatic change of fortune from last year, when more than 100,000 jobs were created in the first half as the economy boomed.

Analysts believe that most of the job losses in this second quarter are due to retrenchments and employers not renewing the work permits of foreign workers.

The rest can be traced to bosses freezing employment, retirement and redundancies or the early release of contract workers.

But at the same time, bosses are firing fewer workers.

Layoffs and redundancies have halved to 5,500, a decline the labour movement indicated last month when it said there were fewer job cuts among unionised companies.

But what struck most analysts is the unemployment rate, which has held steady at 3.3 per cent in June. This exceeded their expectations as they had forecast a higher rate, above 3.5 per cent.

They attributed the lower rate to the non-renewal of the work permits of foreigners, who are then not counted among the unemployed here.

Despite the mixed signals, the overall picture of the job market is ‘much brighter’ than projected, said analysts.

‘We are seeing a gradual bottoming out in the labour market before it improves towards the end of the year,’ said DBS Bank economist Irvin Seah.

He does not share the view of government and labour leaders who had warned of the threat of a second round of layoffs later this year.

Both Manpower Minister Gan Kim Yong and labour chief Lim Swee Say, in their comments on the latest figures yesterday, said it was still too early to celebrate.

‘The most important message is to remind all of us that the worst is not yet over,’ Mr Gan told reporters at the sidelines of an event.

But the figures are ‘encouraging’, he said, adding: ‘It reflects the fact that workers, employers and the Government have been able to work together to work through this recession as a team.’

He also credited government aid measures for minimising layoffs and stabilising the jobless rate, which includes foreigners working here.

He cited the Jobs Credit wage subsidy scheme and the Skills Programme for Upgrading and Resilience (Spur), which subsidises worker training.

They were particularly instrumental in lowering the jobless rate among residents from 4.8 per cent in March to 4.6 per cent in June.

The dip is due to more job seekers deferring their job search in pursuit of training courses, said the MOM in its report.

Out-of-work residents attending training are not counted as unemployed.

But such an artificial propping up of the jobless rate may not be sustained for long, say analysts.

HSBC economist Prakriti Sofat predicts that the jobless rate will peak at around 4 per cent at the end of the year.

This prognosis echoes the warning of further layoffs towards the end of the year by Mr Lim, secretary-general of the National Trades Union Congress (NTUC).

‘So far, the NTUC has received retrenchment notification for more than 1,500 workers,’ he said.

It is due to two reasons: Some companies can no longer hold on to workers due to weak global demand for their goods, while others are moving out of Singapore to a cheaper location.

As a result, the economy could plunge again. This ‘double dip’ would spell a W-shaped recovery.

Nanyang Technological University economist Choy Keen Meng, however, was more upbeat.

‘At the rate things are panning out, I’m confident retrenchments might be capped at 30,000 for the whole year,’ he said, a figure similar to the last peak in 1998 during the Asian financial crisis.

‘The most important message is to remind all of us that the worst is not yet over.’

Manpower Minister Gan Kim Yong

Source : Straits Times - 01 August 2009

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