Drop in Job Growth in First Quarter of 2015

Mdm Speaker, after five years of strong increases, total employment fell by 6,100 in the first quarter of this year compared to the growth of 28,300 a year ago in the first quarter of 2014, and 40,700 in the fourth quarter of last year. This is due to seasonal declines and sharper moderation in employment growth in the manufacturing and construction sectors, as well as parts of the services sector: retail, real estate services, accommodation and food services.

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The moderation in employment growth needs to be seen in the context of our labour market and the repositioning of our economy. First, we have seen a sustained increase in our employment rate, to a high of 79.7% last year. In fact, at 79.7%, we are now among the highest, together with Japan. Our unemployment rate has remained low in the last few year, and, in fact, continues to be among the lowest in the world. Local workforce growth, going forward, will be slower, given that we have one of the highest employment rates and lowest unemployment rate in the world.

Secondly, job vacancies remain high and outnumber jobseekers. The seasonally adjusted ratio of job vacancies to unemployed persons remains stable at 143 openings per 100 jobseekers in March this year, compared to 142 in December 2014. In other words, we have more job vacancies than the number of people looking for jobs.

Thirdly, to sustain growth, we are moving forward towards a more manpower-lean economy. We will continue to encourage businesses to reduce their reliance on labour, especially low-skilled foreign workers. We will also focus more on upgrading the skills of our local manpower, and improving productivity and increasing the pace of innovation as the source of future growth and competitiveness.

Employment data for the second quarter of 2015 is not yet available. We are monitoring the employment trends closely in the coming quarters.

Madam, I thank the Minister for the answers. I have three supplementary questions. Firstly, the Minister mentioned that this is due to seasonal drops in job creation. But this is a 99% drop from the same period a year ago. So, how does the Minister explain this drastic drop, assuming that it is the same season a year ago? Secondly, does the situation of high vacancies, coupled with low unemployment and low job creation, indicate that many companies are not restructuring fast enough to become less labour-intensive and more productive, or what other explanations could account for this situation? Thirdly, is most of the employment creation occurring in the tradable or the non-tradable sectors? What are the proportions of job vacancies in the tradable and the non-tradable sectors?

Madam, the first point I want to emphasise is that there is a saying that a point is a point, two points make a line, three points make a trend. Therefore, I would not draw any conclusion just based on one point. At the same time, I would emphasise that even though with a decline of 6,100 jobs in the first quarter of 2015, compared to a year ago, there are still many more jobs available in the first quarter of 2015, compared to a year ago, in the first quarter of 2014. In fact, the increase over this year-on-year was about 2.7%, almost 90,000 jobs. Therefore, jobs deficit is not the issue facing us today. The job market is

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still growing on the year-to-year basis.

Secondly, the Member asked whether this is a sign that the industry is not restructuring fast enough. There is a contradiction. On the one hand, we are concerned that the job growth has slowed down and yet at the same time, we are concerned that the restructuring is not fast enough. In fact, with a faster pace of restructuring, we can expect job growth to slow even further.

Therefore, I would not adopt just one point and draw any conclusion. But over the next quarter, and over a few quarters, we will be monitoring very closely the job growth trend. From there, I would be able to draw a better conclusion regarding the pace of restructuring. But I am happy to say that having tightened the foreign manpower growth and at the same time with the high employment rate and low unemployment rate, I must say that on the ground, we have seen more sectors, more companies embarking on this journey of restructuring.

Thirdly, the question about whether these are tradable or non-tradable sectors, I would say that it cuts across all sectors. We do notice that for the manufacturing sector, which is a mainly export-oriented sector, the pace of restructuring is a lot faster. As a result, the manufacturing sector has become a lot more manpower lean, compared to the services sector. But for the service sector, both the tradable and non-tradable sectors, are taking in more manpower on the whole, not on quarterly basis; but if you look at it, over the past one year.

Thank you, Madam. I want to thank the Minister for those clarifications. I think one of the reasons why there has been so much interest surrounding those figures – a sudden drop in employment – is that it had been so sharp. One of the concerns with interested observers is whether this is a sign that we may have overdone the manpower tightening. Can I ask Minister whether he thinks that there will be enough warning signs if the overtightening has been overdone?

Mdm Speaker, as I have mentioned, I will not jump to any particular conclusion just based on one quarter's outcome. We must look at it over a period of a few quarters. The job growth in Singapore indeed was strong. As I had said, compare the first quarter 2015, compared to a year ago, there are now another 90,000 jobs available. Our manpower growth was 2.7%.

Now, is a 2.7% growth over one year overdone? I do not think so. I still remember that, in fact, as we tightened the foreign manpower quota, there was a call in this House that we should go for a complete stop in terms of the importation of work permit holders. I think

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that would be overdone. But what we have done was to slow down the growth but yet at the same time, manage the process of transition, in a way that, hopefully, will enable more and more companies, especially the SMEs, to adapt and to grow. It is not to our interest to see a sudden drop and to see a sudden decline in our economic activity in Singapore.

Thank you, Madam. I have just two more supplementary questions. I agree with the Minister's point that one point should not be used to measure a trend. So, in line with what I asked in my question, what would be the job growth figures in quarter two of 2015? Are those numbers available yet?

Secondly, regarding the tradable and non-tradable sectors, if I understand the Minister right, he was saying that the productivity growth has been more successful in the manufacturing and other export sectors. Can I conclude that vacancies are growing more in the non-tradable sectors? And if so, if there is a high number of vacancies in the non-tradable sector, how would the shortage of foreign labour damage the economy because of the shortage and the vacancies in the non-tradable sector? Because for the non-tradable sector, the demand is domestic, the demand is not going anywhere. So, for non-productive companies in the non-tradable sectors, they will be forced to restructure or they would be replaced by others who can meet that demand. So, in some ways, the disruption for the non-tradable sector, due to foreign labour shortfalls, would be self- correcting, would it not be?

Mdm Speaker, the flash estimate for employment in the second quarter of 2015 will come out by the end of this month. Right now, I do not have any information to share.

Secondly, in terms of vacancies, I think the Member is correct, that the non-tradable sectors are the ones facing greater constraints with manpower. For example, many of our F&B, many of our SMEs are involved in non-tradable sector. For these sectors, I have been in close contact with them, because to go back to the old growth formula of heavy dependency on more work permit holders is not a solution. At the end of the day, we do need to find ways to sustain our economic growth, our workforce growth in a more sustainable manner.

MOM is working with them to help them to look at where they are today, and where they think they ought to be three years from now. In other words, as we go through this economic repositioning, it should apply to all sectors, whether they are tradable or non-tradable. I am happy to say that a number of these non-tradable sectors have responded positively. Some of them have given us a proposal to say this is where we are today and this is where I want to be three years from now; and in between from here to there, what kind of support would be needed, whether it is the various financial grants and so on. MOM is working very closely with SPRING and the relevant agencies to look for ways to help them to

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go through this transition.

So, in other words, to go back to the past is not a solution because it just pushes back in our push for repositioning. Looking forward, certainly, we are going to continue to be creative, continue to find win-win outcomes for the agencies, for the companies and for the unions as well.

Mdm Speaker, there have been some proposals made by some quarters to freeze foreign manpower growth. So, I would like to ask the Minister what would had been the impact on companies and the economy if such proposals to freeze manpower growth had been implemented?

Mdm Speaker, I would not be able to give a quantitative response. But in the course of my interaction with many companies, especially SMEs, I would say that even though we have continued to allow the work permit holders to continue to grow at a slower pace, I think already, many of them are facing a lot of constraints. Therefore, on reflection, we did the right thing. We did the right thing by not freezing, not suddenly freezing the importation of Work Permit holders.