Five telltale signs that Singapore’s labour market is deteriorating

Unemployment rate might inch up in coming quarters.

Singapore’s domestic workforce is functioning at nearly full capacity, but a few alarming details show that the labour market might be deteriorating beneath the surface.

A report by Credit Suisse highlighted that the unemployment rate rose to 28% in the second quarter, compared to 2.5% in the first three months of the year.

“Although this is low historically, the details of the labour market are weak, suggesting that the deterioration in the unemployment rate might continue,” Credit Suisse said. 

Among the alarming details is the substantial slowdown in employment growth, with the economy adding just 3,600 jobs in the first half of the year.

This is markedly lower from the average half-yearly increase of 63,000 since 2010, and down from 74,000 in 2H last year. 

“A large part of the decline was attributed to resident employment, which contracted by 8,900 in 1H 2015. Manufacturing employment continued its trend decline, while services employment growth was broadly weaker,” Credit Suisse noted.

Another cause for concern is the fact that job vacancy ratios have come off their highs. The Ministry of Manpower’s labour market report showed that the seasonally adjusted ratio of job vacancies to unemployed persons edged down to 121 openings per 100 seekers in Q2, much lower compared to 143 in March 2015. 

Credit Suisse also noted that the number of hours worked fell further in Q2, which could indicate companies hoarding labour and cutting back on hours.

Redundancies also rose both year on year and quarter on quarter, while turnover ratios such as hiring rates and quit rates have come off, which could indicate lower job finding probability. Re-entry rates also fell slightly.