Construction bust looms as firms begin first layoffs in almost two years

Overall unemployment fell down to 2.2% while redundancies remained at around pre-recession quarterly levels.

Singapore's strong economic recovery has led to more people securing jobs. Total employment rose by 36,500 in the first quarter of 2010, comparable to the seasonal high of 37,500 in the last quarter of 2009. In contrast, employment fell by 6,200 in the first quarter last year due to the global economic downturn, according to a Ministry of Manpower report.

The bulk or 33,400 of the employment gains came from services, higher than 31,500 in the fourth quarter and 7,500 in the first quarter of 2009. Manufacturing added 3,100 workers, the second consecutive quarter of increase after shedding workers from the fourth quarter of 2008 to the third quarter of 2009. Construction registered a small decline of 400 workers in the first quarter of 2010, after 20 successive quarters of employment gains.

With the strong job gains, the seasonally adjusted overall unemployment rate declined to 2.2% in March 2010 from 2.3% in December 2009. Similarly, among the resident labour force, the unemployment rate dipped to 3.2% in March 2010 from 3.3% in December 2009. An estimated 63,300 residents were unemployed in March 2010. The seasonally adjusted figure was 66,200.

Long-term unemployment also improved. The number of residents who had been looking for work for at least 25 weeks decreased to 14,600 in March 2010 from 16,600 in March 2009. They formed 0.7% of the resident labour force in March 2010, slightly lower than 0.8% a year ago.

Redundancies remained at around pre-recession quarterly levels. 1,800 workers were retrenched and 600 workers had their contracts terminated prematurely, resulting in a total of 2,400 workers made redundant in the first quarter of 2010. This was comparable to 2,220 in the fourth quarter of 2009 and only one-fifth (19%) of the record number laid off in the first quarter of 2009 (12,760).

Based on CPF records, half of the residents made redundant in the fourth quarter of 2009 were re-employed by March 2010. This re-employment rate within 6 months of redundancy was broadly comparable to the 52% in December 2009 and 51% in September 2009, after improving from the low of 43% in June 2009.

Job vacancies rose by 4.3% over the quarter to 37,300 in March 2010, which was 63% higher than the low of 22,900 a year ago. Excluding seasonality, job vacancies rose for the fourth consecutive quarter in March 2010. Coupled with the reduction in unemployment, the seasonally adjusted ratio of job vacancies to unemployed persons increased for the fourth straight quarter to 0.90 in March 2010 from the low of 0.36 in March 2009.

Labour turnover continued to increase, signalling a tightening of the labour market. The average monthly recruitment and resignation rates rose significantly to 2.6% and 2.0% respectively in the first quarter of 2010 from 1.9% and 1.8% in the same period last year. After adjusting for seasonality, both the recruitment and resignation rates rose for the third successive quarter.

Driven by the cyclical upturn, labour productivity rose over the year by 13% in the first quarter of 2010, improving sharply from the growth of 2.7% in the fourth quarter and 0.6% in the third quarter of 2009. The average nominal monthly earnings grew over the year by 3.7% in the first quarter of 2010, following four consecutive quarters of decline. After adjusting for inflation (0.9%), the rise in real earnings was 2.8%.

On the back of strong productivity growth, the overall unit labour cost (ULC) for the whole economy fell by 8.7% in the first quarter of 2010, steeper than the 6.1% decline in the preceding quarter. The corresponding declines in the manufacturing ULC were 25% and 12% respectively. Driven by the reduction in manufacturing ULC, the unit business cost (UBC) in manufacturing declined by 12% in the first quarter of 2010 compared with the 10% decline in the preceding quarter.

In summary, the labour market strengthened in the first quarter of 2010, driven by the robust rebound from the economic downturn. Employment grew strongly, contributing to an improvement in unemployment for the second straight quarter as redundancies remained at pre-recessionary levels. Amid rising job vacancies, labour turnover rose further signalling a tightening of the labour market. Reflecting the cyclical upturn, labour productivity grew strongly.