For the first time in the past 5 years, the Singapore job market is beginning to contract.
According to a report by the Manpower Ministry, the total employment fell by 6,100 in 1Q2015. Total employment in March 2015 was at 3,617,800, which was still 2.7% more than a year ago.
Some claim that this contraction may be due to companies relying less on labor and changing how their business operates in today’s economic climate.
In a piece published in The Straits Times, bosses from several companies expressed their concern. Within the article, they expressed that the lack of a strong workforce was making it difficult to both fill vacancies and take on new contracts.
Foreign workplace policies are another reason for the drop in employment as well, according to some sources. In 2010, the government created tight policies meant to discourage companies from exploiting the use of cheap foreign labor
There is some good news to the situation also. Koh Juan Kiat, the executive director of the Singapore National Employers Federation, said, “If employment continues to contract and the economy is still growing, productivity growth may turn positive.” Adding to the statement, Kiat mentioned, “It may also reduce our reliance on foreign workers.”
There has been an overall slowdown in job offers in Singapore over the last two to three months according to Kurt Wee, President of the Association of Small and Medium Enterprises. When asked about why this is occurring, Wee mentioned, “businesses are pacing themselves for the medium to long term.”
Unfortunately, these developments are causing concerns for some companies operating in Singapore. For these companies, the reality of potentially moving their labor forces out of the country is becoming more likely. Without the ability to use foreign labor, some factories may be required to relocate to stay economically competitive.
A local freight/logistics business owner, Mr. Kelvin Ho identifies with this mindset. Speaking on the effects of the now more difficult hiring process, he said, “If factories are not coming to Singapore, we might as well close down.” If the hiring environment does not improve, Mr. Ho suggested that he may relocate his company to a country that is easier on his hiring and business model, such as Vietnam or Jakarta.