Locals feel the heat more than foreign workers as growth momentum slows

Job seekers brace for challenging months ahead.

There’s no denying that the labour market in the city-state is softening as overall employment continues to contract year-on-year. However, a notable disparity could be seen between employment in manufacturing & services and employment in the construction sectors.

According to analysts from DBS, employment number in the former sector has contracted significantly, while employment in the latter has remained steady.

DBS says in plain sight, this moderation in employment growth could easily be attributed to the cyclical slowdown as external environment remains hazy.

“In addition, although overall unemployment rate has remained stable at 2.0% sa, the corresponding figure for residents and citizens have increased marginally for the second consecutive quarter (3.0% and 3.1% respectively versus 2.8% and 2.9% in Jun15),” DBS says.

However, digging deeper, DBS says the main explanation is that locals are mainly engaged in higher skilled jobs, which are more susceptible to external business cycles.

Conversely, foreign workers usually take blue collared jobs, which are inelastic and domestically driven.

“So, when growth momentum slows, the locals will feel the pinch more than the lower skilled foreign workers,” DBS says.

Meanwhile, DBS warns of a hard couple of months ahead.

“Growth momentum is expected to remain sluggish, which will have repercussion on the labour market. Much will depends on the economic outlook in China. Given the deceleration in China and barring a stronger recovery in the US or the Eurozone, there could potentially be more downside risks on the domestic employment outlook,” DBS says.