SINGAPORE – Singapore’s unemployment situation improved across the board in June 2024, according to preliminary labour market data for the second quarter of 2024 released on July 31.

       The Ministry of Manpower (MOM) said in its report on the data that the unemployment rate of Singaporeans fell from 3 per cent in May 2024 to 2.8 per cent in June 2024.

       The unemployment rate of residents – Singaporeans and permanent residents – likewise declined from 2.9 per cent to 2.7 per cent over the same period, while the overall rate fell from 2.1 per cent to 2 per cent. These figures fall within the range seen in the non-recessionary years of 2015 to 2019.

       Meanwhile, the number of residents working in growth sectors, which tend to hold better job and salary prospects, continued to rise in the second quarter of 2024.

       These sectors include financial services, information and communications, health and social services, as well as professional services, noted MOM, without providing figures.

       Sectoral figures and other details will be reflected in finalised labour market data only for the quarter set for release in September.

       The preliminary data also showed that the increase in growth sectors was offset by a seasonal decline in the number of residents working in the retail trade sector, leading to a decline in the overall resident employment.

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       MOM said this is because employers temporarily hire more workers in the fourth quarter of each year in preparation for year-end festivities.

       “While resident employment contracted slightly, this was not unexpected as resident employment typically dips or posts smaller increases in the second quarter,” it said.

       Still, total employment in Singapore grew by 11,300, outpacing the growth of 4,700 seen in the first quarter of 2024.

       The faster growth was driven by an increase in non-resident employment, which accounted for all the employment growth in the second quarter, MOM said.

       It added that this non-resident employment growth came from lower-skilled work permit holders working in non-PMET (professional, managerial, executive and technical) roles in construction and manufacturing, which residents do not typically take on.

       “The rise in construction after the contraction last quarter reflected firms adapting to the sector’s change in dependency ratio ceiling,” MOM said, referring to the quota of foreign workers in relation to local hires among employers.

       The ministry also said a rebound in non-resident employment from the previous quarter suggested continued demand for labour in the economy. It noted that employment grew for both residents and non-residents overall for the first half of 2024.

       MOM also found that there were 3,100 retrenchments in the second quarter, which is comparable to the 3,030 in the previous quarter.

       Retrenchments in the services sector, at 2,200, made up the bulk of the figure.

       The manufacturing sector cut 700 jobs, while the construction sector retrenched 200 workers.

       Retrenchment levels were broadly stable in most sectors, with business reorganisation or restructuring remaining the top reason for retrenchments in the quarter, the ministry said.

       MOM said its forward-looking polls on hiring and wage expectations for the third quarter were unchanged from the previous quarter.

       It said: “As a result, we expect labour market momentum to be sustained in the coming quarters, with employment and wages continuing to grow in tandem with an expected gradual pickup in Singapore’s economy.

       “However, with slowing resident workforce growth and low resident unemployment rates, continued growth in resident employment is likely to become more muted.”

       On the forward-looking statistics, DBS Bank economist Chua Han Teng said: “The stance by Singapore’s businesses still looks cautious, probably due to a still uncertain global economic environment seen in ongoing geopolitical tensions, China’s uneven economic growth, and the undecided extent of economic policy such as interest rate cuts by global central banks like the Federal Reserve.”

       He added: “Nonetheless, we expect Singapore’s economic expansion to improve on a sequential quarter-on-quarter seasonally adjusted basis, driven by external-led sectors, which should boost employment growth in (the second half of 2024).”

       He said DBS forecasts Singapore’s real gross domestic product growth to rise to 2.7 per cent for 2024, up from 1.1 per cent in 2023.

       UOB associate economist Jester Koh said: “Normalisation of employment in retail trade usually follows in the first two quarters of the subsequent year and should not come as a surprise.”

       On figures to watch out for in the finalised report, Mr Koh said the ratio of job vacancies to unemployed people will be particularly relevant for assessing the extent of the ongoing moderation in Singapore’s labour market tightness.

       He noted that the figure has fallen from the peak of 2.54 in the second quarter of 2022 to 1.56 in the first quarter of 2024, but remains above 1, which indicates that there are more jobs available in the market than people seeking employment.

       Recruitment and resignation rates will also be key to watch as a dip in recruitment rate could indicate that firms are more cautious and selective in their hiring decisions amid macroeconomic uncertainty, he said.

       Meanwhile, declines in resignation rates could imply that workers are less confident about finding a new job and may choose to stay in their current role, which could indicate some loosening in labour market conditions, Mr Koh said.

       Mr Desmond Choo, who is assistant secretary-general of the National Trades Union Congress and a labour MP, said in a Facebook post on July 31 that with hiring sentiments holding steady, room for further development and expansion remains.

       “However, the fact that non-resident employment growth accounted for all the increase in total employment in the second quarter this year, coupled with our low resident unemployment rate, suggests we might be approaching structural limits within our resident workforce,” he said.

       “This is a crucial moment for us. We need to focus on enhancing the skills and capabilities of our resident workers to ensure they remain relevant and adaptable in a changing economy.”