Yahoo Finance Singapore’s Unemployment Falls To A 6-Year Low But Is The Labour Market As Rosy As It Seems?
MOM’s latest data showed that unemployment rates have declined to an overall 1.9% (2.7% for resident and 2.8% for citizen) in August 2022. This is the lowest unemployment rate since March 2016.
For Singapore’s labour market, these statistics are hard to beat – unemployment rates are even lower than pre-pandemic levels – and seem to indicate that we are definitely out of the pandemic doldrums. Yet, MAS also cautions about the risks of manufacturing activity contraction, soaring inflation and interest rate hikes that can put a damper on the labour market activity.
So, why does the labour market appear so exuberant and what should employers and employees be mindful of in the coming months?
Read Also: 4 Job Sectors In Singapore That Will Do Well In 2022
Unemployment Data Is A Lagging Indicator
The 7 October 2022 release of unemployment data is based on August 2022 numbers, about a month’s delay. Prior to the pandemic, this delay was even more obvious as the numbers were only reported every quarter. While the reporting of unemployment data has increased to a monthly basis from a quarterly basis (due to the need for swifter reporting during the pandemic), unemployment data is still a lagging data indicator.
For employers who are hiring and jobseekers looking for a job, this may not be reflective of the current actual market conditions which can change swiftly. While August was an optimistic month for businesses which welcomed the reopening of Singapore’s borders and relaxation of safe management measures, the current sentiment is more worrisome about soaring inflation, interest rate hikes and a crashing stock market.
Read Also: What Businesses Should Know About Singapore’s Economic Outlook For 2022
Soaring Inflation Is Causing Business Costs To Increase And Interest Rates To Hike
Singapore’s core inflation reached a 14-year high in August 2022. This not only spells increasing costs for consumers, but also for businesses which are not spared from the rising cost of materials.
Globally, inflation has yet to peak for many countries. In particular, the U.S. is aggressively hiking interest rates to stem domestic inflation. This has in turn caused Singapore’s interest rates to rise, leading to rising cost of borrowing for businesses.
These rising costs are likely to dampen the business outlook for many companies which may in turn lead them to hold back on hiring.
Prominent Tech Companies Are Cutting Back On Manpower
Internationally, prominent tech companies have been cutting back on manpower with slowing job offers or even layoffs. In Singapore, Shopee has rescinded job offers and laid off its employees across its Southeast Asian teams. As tech companies cut back on their growth strategies in pursuit of sustainable revenue, there’s the inevitable trimming of excess manpower.
In a tight labour market, these layoffs would be quickly absorbed back into employment as employers compete to hire. In the environment of the Great Resignation, this could be beneficial for employees who can pivot to better paying roles. However, if and when sentiments change, this could spell a tough period of unemployment for those who are retrenched.
Read Also: Would The Great Resignation Become The Great Retrenchment?
Employees And Employers Should Not Be Complacent With The Low Unemployment Rates
With the tight labour market, employers would have to work hard to attract and retain the right talents. The high unemployment rates would mean that employers may also have to think innovatively about expanding the labour pool beyond those who are unemployed to those who are not actively seeking employment, such as retirees and stay-home-parents.
However, employees should also not be complacent and think that their positions are secure in a tight labour market. After all, as the layoffs at Shopee have shown, retrenchment can come anytime even if you are employed by a tech unicorn. So instead of quiet quitting and being at risk of being retrenched when the company lays off excess manpower, consider leaning in instead.
Read Also: INSIGHTS: Why The Way To Get Out Of Your Work Funk, Is To Do Even More
The post Singapore’s Unemployment Falls To A 6-Year Low But Is The Labour Market As Rosy As It Seems? appeared first on DollarsAndSense Business.
