Job growth slows, layoffs up in 3rd quarter

But analysts say labour market is still strong in face of economic slowdown

By Rachel Chang, The Straits Times, 1 Nov 2012

HIRING slowed and layoffs rose in the third quarter as economic activity slowed across the nation.

Preliminary estimates from the Manpower Ministry yesterday showed 24,900 jobs were created from July to September, down from 31,900 in the same period last year.

It was also a drop from 31,700 in the second quarter this year.

The main slowdown occurred in the services sector, particularly in retail businesses. It created 11,300 jobs in the third quarter, slightly more than half the 21,200 in the same period last year.

These firms are hiring at a slower pace partly because they are in a labour-intensive sector that is being hardest hit by the Government tightening foreign worker quotas, said SIM Global Education senior lecturer Tan Khay Boon.

Multinational corporations, noted recruitment firms, have also turned especially cautious.

The US presidential election and China's imminent leadership changes mean "the future direction of the world's two largest economies is currently in the balance", said Kelly Services Singapore's country general manager Mark Hall. So some are "delaying normal planning until 2013".

In line with the overall trend, manufacturing added 3,700 jobs, down from 3,900 in the same period last year.

Only the construction sector saw an increase, helped by public infrastructure projects like new MRT lines. The sector added 9,800 jobs, up from 6,700 in the same period last year.

At the same time, layoffs rose to 3,300 after declining in the preceding two quarters.

Acting Minister for Manpower Tan Chuan-Jin, writing on Facebook yesterday, said redundancies and labour turnover "are part and parcel of restructuring, and free up manpower for more competitive businesses".

In this light, he added, the number of layoffs in the third quarter "is not excessive". The ministry will monitor the situation and facilitate job search for the retrenched, he said.

Barclays Capital economist Leong Wai Ho does not think companies are cutting jobs because revenues have fallen off the cliff. "These are not the distress layoffs we see in a recession. Right now, layoffs are from companies thinking long term and restructuring operations strategically."

In the last recession, layoffs reached a high of 12,800 in the first quarter of 2009.

Even though hiring slowed and layoffs rose, the jobless rate dipped slightly from 2 per cent in the second quarter to a historic low of 1.9 per cent.

That's because in the current tight labour market, enough jobs are being created for a labour pool whose growth is still being limited by foreign worker import curbs.

The unemployment rate for residents - citizens and permanent residents - is 2.8 per cent. It is 3 per cent for citizens.

Both are unchanged from the previous quarter.

Economists said this is therefore still a strong overall showing from the labour market, given the global uncertainties and sluggish prospects for the Singapore economy.

"I think the picture is a robust one," said OCBC economist Selena Ling. "Despite a slowdown in job growth, the labour market remains very resilient."