Driven by the Ministry of Manpower’s (MOM) policies to increase workforce quality and promote productivity-driven business growth, Singapore experienced a strong labor market in 2014.
As the country steps into 2015 and beyond, restructuring of the Singaporean economy remains a critical objective as the labor market tightness.
And the importance for businesses to adopt fewer labor-intensive practices becomes a priority to combat the slowing of local employment growth.
Singapore Job Market - 2014 in Review
During the last year, Singapore saw low unemployment rates and an increase in job vacancies.
For the whole year, the annual average unemployment rate remained at 2.9%, unchanged from the previous year.
But the ratio between job vacancies to unemployed people increased in 2014 to 1.39 from 1.29 in 2013. This indicates that more jobs were available for those who were seeking employment.
Additionally, local hiring remained strong throughout 2014 while the growth of foreign employment moderated. 2014’s total employment grew by 122,100 or 3.7%, excluding Foreign Domestic Workers (FDW).
The employment growth experienced in 2014 was driven by local employment growth, with more women and older locals participating in the labor market. Local employment growth in 2014 was 96,000 or 4.4%, as compared to 82,900 or 4.0% in 2013.
Out of all the job creation in 2014, 73.8% of positions were granted to locals. However, it is expected that this employment growth is not sustainable and will slow over the rest of the decade.
For the third year in a row, foreign employment growth (excluding FDW) moderated to just 2.4% or 26,000. This was down significantly from 2013’s reported 48,400 or 4.6%. One of the main reasons for this moderation is the tightening of measures by foreign manpower.
The Services sector saw the bulk of foreign employment growth at 21,500. On the other hand foreign employment slowed in the Construction sector to 9,700 in 2014, from 2013’s 31,600, because of the slower construction growth.
In 2014 real monthly income for citizens employed full-time saw an uptick of 1.4%. Real income growth has affected many people in the country and has been sustained over the last 5 years.
As time moves forward, the tight labor market will press for increased wages but these wages will only be sustained through a long-term growth of productivity.
While incomes increased, labor productivity declined by 0.8% in 2014. As employment gains outpaced GDP growth, the falling productivity was witnessed across multiple sectors. The only sectors that reported increased productivity were Manufacturing and Financial & Insurance services.
Singapore Job Market - Sector Analysis and Outlook for 2015
Total employment growth in the Construction sector slowing massively in 2014, Compared to 39,100 in 2012 and 35,200 in 2013, last year saw only 14,300 Construction jobs created. The sector is desperately in need of a productivity boost, which needs to be supported by hiring and retaining more skilled/productive workers.
Throughout 2015, the Construction sector is projected to continue to drive foreign employment. But since pushing back of public sector projects and reduced private sector demand is expected, the Construction sector will likely experience a continued moderation of hiring.
In the Manufacturing sector, labor productivity increased by 2.5% in 2014 in tandem with the growth of the manufacturing GDP, which grew 2.6% in 2014 compared to 1.7% in 2013. The sector also experienced a drop in employment of -4,400 which was mostly a result of the completion of several Process and Marine large-scale projects that had employed foreign workers.
In 2015, the Manufacturing sector has a moderate hiring outlook. With global oil prices at an all-time low, certain manufacturing segments might experience slowed growth.
Accounting for the most employment growth in 2014, the Services sector had total employment increase by 111,700 compared to just 89,300 in 2013. The sector employed more locals in 2014 than the previous year (99,100 compared to 77,100) and also increased its number of foreign workers compared to 2013 (21,500 compared to 12,100).
Unfortunately, the productivity of the Services sector became negative as employment growth exceeded that of the GDP.
In 2015 employment demand for the Services sector has a strong outlook and will likely be one of the main contributors to employment growth this year.
Final Words On The Singapore Job Market
Throughout 2015, the job market for Singapore is expected to remain tight and the Ministry of Trade and Industry (MTI) expects the country’s economy to grow between 2-4% in 2015.
An upward pressure to increase wages can be expected since the labor market remains tight. Although these wage hikes will not be sustainable without a corresponding increase in productivity. All sectors must focus on improving productivity in their labor force.