• True extent of the economic damage can only be felt when income cuts are also taken into account, one analyst said
• Construction sector unemployment relatively lower due to government measures to keep foreign workers employed
• Jobs Support Scheme may need to be extended if Covid-19 restrictions persist

SINGAPORE — The job market slump is set to continue for the rest of the year, with recovery possible only when a vaccine for Covid-19 is found, economists have warned.

Should the downturn persist, the Government may have to look at extending its job support measures, they added.

The economists were commenting on the latest labour market report from the Ministry of Manpower (MOM) on Wednesday (July 29).

Advance estimates showed that retrenchments here doubled and unemployment among residents had risen to 3.9 per cent in the second quarter of the year compared with the previous quarter. Total employment also contracted by 121,800, more than four times worse than in the first quarter.

On the same day, Deputy Prime Minister Heng Swee Keat announced that more than 13,000 work attachments are now available for mid-career job seekers.

ECONOMISTS SAY WORST YET TO COME

Economists said that the slump in the labour market was expected, adding that it would have been worse had it not been for government relief measures.

Senior economist Irvin Seah with DBS bank said that the substantial slump in the labour market was unsurprising since it had coincided with the circuit breaker.

The Government had imposed a two-month circuit breaker between April and June in a bid to contain the spread of Covid-19, with many businesses having to limit or cease their operations as a result.

Mr Seah added that the unemployment numbers do not fully detail the pain felt by the economy.

“Beneath those headline figures, what people don't see is income degradation,” he said. “For example, the Jobs Support Scheme has saved jobs, but income has been hit… The hit on income is more broad-based and deeper than what the employment figures are showing.”

The Jobs Support Scheme is a wage subsidy programme to help companies retain and pay their workers in the midst the Covid-19 crisis.

Mr Song Seng Wun, an economist at CIMB Private Bank, noted that even with the lifting of the circuit breaker, restrictions such as those on travel remain.

“The longer these restrictions are in place, the more pressure businesses will continue to face,” he said.

Mr Song pointed out that the labour market situation would have been “far weaker” had the Government not pumped in close to S$100 billion over four national budgets.

MOM’s report also showed that the services sector had the worst employment and retrenchment figures, compared to the manufacturing and construction industries.

For employment, the services sector — excluding foreign domestic workers — saw a 97,500 drop in employment, whereas manufacturing saw a 9,600 decline and construction, a fall of 14,300.

Experts said that the services sector is especially affected during the second quarter due to the circuit breaker curtailing demand for services such as food and beverage (F&B), tourism and hospitality. However, they added that the construction industry is only doing relatively better due to government measures in place.

OCBC bank's head of treasury research and strategy Selena Ling said: “The foreign workers employed in construction were just under stay-home notice or quarantine, especially in the dormitories, so technically, they are still employed.

“The foreign workers in the services sector, especially retail, F&B, personal services, for instance, were likely impacted more from Malaysia’s MCO (movement control order) and our domestic circuit breaker.”

The manufacturing industry, on the other hand, is relatively more stable.

“Manufacturing, especially in the biomedical pharmaceutical (industry), is still considered essential, so companies probably continued operating during the circuit breaker,” Ms Ling said.

Mr Seah from DBS said that the labour market will continue to deteriorate until the end of the year, and may recover only in the second half of 2021.

“No one knows when we are going to have an effective vaccine that will be distributed around the world,” he said. “Hence, industries like aviation, tourism and hospitality will take a long time to recover.”

Given the uncertainty in the Covid-19 situation and the ongoing travel restrictions, firms would still hesitate before hiring.

“Chances are, the Jobs Support Scheme may have to be extended (beyond August) if travel restrictions continue to remain in place,” Mr Song said.

Mr Seah added that while the decline will continue, the worst of the slump appears to be over, as restrictions are no longer as severe as during the circuit breaker.

“If there's any silver lining, it is that any deterioration will be less sharp compared to what we’ve seen,” he said.

MORE MID-CAREER ATTACHMENTS

During this tough period, Deputy Prime Minister Heng is urging employers to be flexible.

“(Some employees) may not be a perfect fit, but we must take in those who are willing to learn, willing to adapt and help our people to learn new skills,” he said.

“Employers must redesign jobs so they can make the best use of the skills, make full use of all the tools we put out under our industry transformation maps to both upgrade the skills of our workers and upgrade operations.

“And in that way, when the Covid situation passes… they will be more competitive, more productive.”

Mr Heng, who is also the Coordinating Minister for Economic Policies and Minister for Finance, was addressing the media at the SGUnited Jobs and Skills Centre at Kampong Chai Chee Community Club, where he gave more details on a programme to help mid-career jobseekers.

Launched in May, the programme helps workers build up industry-relevant experiences through traineeships so that they can work towards permanent jobs.

Mid-career jobseekers may now apply for more than 13,000 company attachments across sectors and roles such as that of business development manager, software engineer, finance analyst, and e-commerce associate.

Attachments under this SGUnited Mid-Career Pathways Programme will be between four and nine months, with participants receiving a monthly training allowance of between S$1,400 and S$3,000, of which 80 per cent will be funded by the Government.

Mid-career individuals who are keen to apply for the attachments should visit MyCareersFuture.sg for more information.