One of the least widely understood areas of every economy is its labour market — particularly as the media tend to focus on a single figure when describing its situation — the unemployment rate.
On-the-ground reality, however, cannot be summarised with just one number as each industry faces its own challenges, which create unique conditions for jobseekers.
This has now been exacerbated by the COVID-19 pandemic, which has affected each industry in a completely different way.
* All figures cited below are from official datasets available on MOM website, unless otherwise stated.
Stability on the surface
Unemployment in Singapore nudged up Q2 from 2.7 per cent to 2.8 per cent (and 3.5 per cent to 3.7 per cent for resident workforce) — what is still an improvement over 2020.
It is also much better than in most of the Western countries — about five per cent in Britain, six per cent in the US, eight per cent in France, or a whopping 15 per cent in Spain.
Moreover, this bump is likely due to the reintroduction of temporary restrictions in the city-state, which forced employers to lay off staff in the most affected business — and should have already gone down in Q3 as Singapore decided to “live with Covid”.
After all, even during “normal” times, a change of 0.1 to 0.3 per cent was nothing unusual.
However, what these figures are not telling us is what the situation looks like for specific industries and companies. It is there where COVID-19 has left a significant impact — both bad and good — accelerating qualitative change in the entire labour market.
Winners of the pandemic: IT & Finance with close to 15,000 new jobs
IT and insurance are the only two segments of the market which have not seen a contraction in employment throughout the entire pandemic. Hiring slowed down in Q2 of 2020, but remained positive, while everybody else was facing some degree of layoffs.
On the whole, since the beginning of 2020 until today, close to 10,000 people found employment in IT & Communications — with Q2 of 2021 responsible for a whopping 3,600 new jobs, the highest quarterly figure on record.
In total, around 6,200 people found employment in the tech sector in the first half of 2021. This is nine times more than in H1 2020 and by far, the most in recent history (the second highest tally is 3,300 recorded in H1 of 2013).
Meanwhile, financial and insurance services — a staple of Singaporean economy — have also recorded gains in employment, netting 4,100 jobs since the beginning of 2020.
While not as impressive as the technology sector, it is still a healthy gain in some of the best paid professions in the country. Among other gainers are professional services, chiefly legal and admin, which now provide employment to 2,100 people more than before COVID-19.
In other words, some of the most sought-after office careers have not been dented by the pandemic.
Strong performers: Health, Education and Public Administration
Other areas that saw comparatively large gains are unsurprisingly the healthcare sector (12,600 jobs) and Public Administration & Education (close to 10,000 more than at the end of 2019).
Transportation has also seen an uptake, adding over 3,000 jobs, boosted by greater demand for delivery services.
I have decided to mention them separately, as their future is quite uncertain, depending on how the pandemic continues to affect our lives. High demand for new workers in healthcare is an obvious consequence of the strain the virus has put on hospitals and clinics, as well as the need to adhere to new safety protocols.
Similarly, public administration needs more people, among other things, to take part in the pandemic response and provide services to both companies and individual residents that were not necessarily prior to the outbreak.
But whether these jobs are here to stay remains to be seen. Nevertheless, they have provided a healthy boost to domestic employment in a time of need, particularly among Singapore residents (citizens and PRs).
Biggest losers of COVID-19: services, construction, manufacturing and… foreign workers
Frankly speaking, I should probably just write “everybody else”, since outside of the ones I mentioned, pretty much all industries have shedded jobs.
That said, the most impacted ones are, quite obviously, those requiring large numbers of people either working together or interacting with customers which, in both cases, was severely restricted by the social distancing rules or outright lockdowns.
Services (excluding those I mentioned above) saw a drop of 120,000 jobs. In construction, another 56,000 are gone, followed by manufacturing with 46,000.
It is important to underscore, however, that vast majority of the affected workers were not local but foreign. Collectively, they have borne the brunt of the pandemic in Singapore.
By the end of 2020, resident employment actually went up by about 15,000 jobs compared to the end of 2019. Within that same time, close to 200,000 foreigners had lost their jobs in the city-state.
This trend continues in 2021, with non-residents losing 21,000 jobs in Q2 of 2021:
Cuts have hit the lowest-paid workers and domestic helpers the most, but S- and Employment Pass (EP) holders have not been spared.
At the end of 2019, Singapore had 193,700 EP and about 200,000 S-Pass holders. By the end of 2020, these figures dropped to 177,000 and 174,000 respectively. Their decline has continued into 2021, as they dipped to 167,000 and 164,000 this June. It’s an accumulated loss of over 62,000 jobs paying at least S$2,500 or more.
Singapore will see better times ahead
With the reopening of the economy and gradual easing of the border restrictions, as Singapore begins “living with Covid”, employment should record a stronger bounce-back — and there are already indicators of this acceleration in the current Q3 of the year.
A survey by Indeed registered a 55.7 per cent jump in job postings in August 2021, as compared to pre-pandemic figures for 1 February 2020.
Job creation in production, transportation and installation and maintenance was up 125 per cent, 109 per cent, and 89 per cent in August respectively, when compared to February 2020.
Not only is employment returning — it is doing so at a pace that is favouring jobseekers who are likely soon to be inundated with options, after many months of desperate job search, in some cases.
Indeed’s APAC Economist, Callam Pickering, was quoted by “Staffing Industry Analysts” saying (about Singapore):
“Competition for talent is increasing monthly and shows no sign of easing. Market dynamics for many occupations have shifted towards the jobseeker, potentially leading to greater choice for job seekers and higher salaries.”
“As the economic recovery continues, we expect skill shortages to either develop or become exacerbated across a broader range of occupations that may create a more challenging hiring environment for businesses and recruiters.”
Official government data for the earlier quarter appears to be confirming this trend, as vacancies have — for the first time since March 2019 — outstripped the number of people looking for a job.
With tens of thousands of foreigners gone — many losing relatively well-paying positions — while significant border restrictions remain in place to keep COVID-19 out, the number of good job opportunities for the locals may be highest in years.
That said, it’s no guarantee of employment if not enough people in Singapore are qualified to fill them. Of course, every year brings thousands of new graduates, for whom it may be a golden opportunity (particularly after more than a year of uncertainty about their careers).
But if there’s a significant mismatch between skills required for the position and the competences of candidates, Singapore may move from an employment crisis to a labour crunch, strangling businesses that are trying to get back on track as quickly as possible.
Back in July, Minister Tan See Leng mentioned there were already 22,000 vacancies in the PME professions that companies were struggling to fill. With the latest hiring spree, these figures may quickly increase in Q3, slowing down hiring and, consequently, Singapore’s economic growth.
Understandably, the perspective of having way more openings than candidates must seem very attractive to everybody looking for a job, but it’s one of the worst problems for companies — and just as bad for the country as unemployment is.
Economy needs to be as close to the right balance as possible to function well, with a sufficient number of vacancies to allow people find good jobs (and companies the right employees) quickly. Every mismatch between the supply of and demand for labour can cascade into nationwide economic crisis.
Singapore is succeeding in the qualitative shift thus far
As I mentioned before, COVID-19 pandemic has accelerated a qualitative shift in Singapore’s labour market.
The most affected industries are actually those that pay employees the least, or which had already suffered from international low-cost competition even before 2020.
Meanwhile, advanced services appear to be doing well. It is particularly interesting as the pandemic has also promoted a work-from-home model, in which it doesn’t really matter if your employee is five or 5,000 miles away.
Despite this change (and obvious cost pressures in a tough economic environment), Singapore is adding employment in IT or finance, which suggests that its competitive advantages remain strong and it can hold its own even if employers can technically employ a remote foreign worker for half the price.
The question remains whether employment in the most affected sectors is going to return to pre-pandemic levels, particularly in manufacturing and many services (construction is safe as it happens locally).
In 2020, manufacturing companies lost 37,800 jobs, including around 10 per cent (3,600) locals. This trend continues throughout 2021, and may last for a while longer.
Panasonic has just announced it would lay off 700 people and close its refrigeration manufacturing plant next year, moving jobs to Malaysia and China. Can they be replaced with other investment? It’s impossible to say yet.
Elsewhere, in-person retail has seen many stores closing and/or moving their operations online. They are unlikely to return, creating a cascade of consequences — from higher employment in IT services, to more empty spaces in shopping malls, downgrading future construction in anticipation of more retailers going digital, to outsourcing a lot of the work abroad (since it doesn’t matter where staff running an online shop is located).
Early figures suggest that Singapore is doing well, but it’s too early to say whether this trend continues over the long-term.
As I argued in my previous article, Singapore is exceptionally well regarded for its handling of Covid-19 and is reaping rewards thanks to the trust it has gained during the height of the pandemic last year as well as its dedication to resume business as usual right now.
Growing employment in certain services (while exodus is seen in for say, in Hong Kong) suggests that the city-state is a priority choice for international business in post-COVID Asia.
However, it is going to take at least a few years for the situation to settle in this new reality — and if the local workforce is not quick enough to adapt, companies may move either themselves (or many of their jobs) out of the country in the end.
After all, it has never been easier than it is now.
Featured Image Credit: Maverick Asio/SOPA Images/LightRocket via Getty Images