MOM Q1 2024 Report: Unemployment rates rise, retrenchment challenges highlighted

SINGAPORE:  The labour market in Singapore expanded in the first quarter of 2024, though at a slower pace compared to Q4 2023, with total employment growth driven primarily by residents, according to the Ministry of Manpower (MOM) in its labour market report released on Thursday (20 June).

Non-resident employment declined for the first time since the third quarter of 2021.

According to the report, total employment grew by 4,700 in the first quarter of the year, contributed solely by an increase of 5,500 in resident employment.

This increase was driven by the financial and insurance services and public administration sectors.

Non-resident employment fell by 800, mainly in the construction and manufacturing sectors, as the lower Dependency Ratio Ceiling (DRC) for the construction and process sectors came into effect.

Unemployment rate rises: Citizen rate reaches 3.1%, Resident rate 3.0%

Arguably, the most significant statistics in the report may be that the unemployment rate increased by 0.2%, from 2.9% to 3.1% for citizens, compared to 2.8% to 3.0% for residents, and by just 0.1%, from 2.0% to 2.1% overall, from December 2023 to March 2024.

Additionally, the re-entry rate of retrenched workers decreased from 61.5% to 59.4% in the last quarter.

This suggests more people are unemployed, and those who are retrenched may be finding it harder to get re-employed, despite the increase in vacancies.

However, MOM in the report defended that continued increases in unemployment rates are not expected, as retrenchments continued to ease and resident employment growth had been positive in Q1 2024.

The report noted that number of retrenchments continued to drop in 1Q2024, from 3,460 in the previous quarter to 3,030, due to the decrease in retrenchments from outward-oriented sectors such as wholesale trade and electronics manufacturing.

The incidence of retrenchment also continued to fall in the first quarter, to 1.3 per 1,000 employees.

This was lower than pre-pandemic levels, where the quarterly average between 2015 and 2019 was 1.7 per 1,000 employees.

“Across the economy, more firms cited business reorganisation or restructuring in 1Q 2024 as the reason for retrenchment, while retrenchments due to concerns of recession or downturn and high costs have declined,” MOM said.

Re-employment rate of retrenched residents dipped slightly to 59.4% in Q1 2024

“Nearly six in 10 or 59.4 per cent of retrenched workers were able to re-enter employment six months post-retrenchment, although the re-entry rate has dipped slightly compared to the previous quarter at 61.5 per cent.”

The decline in re-entry rate was observed in the information and communications, financial and insurance services, as well as professional services sectors.

The resident long-term unemployment rate also remained low at 0.8%. Long-term unemployed refers to those unemployed for at least 25 weeks.

MOM reported that following a cooling labour demand in 2023, job vacancies rose for the second consecutive quarter in March 2024 to 81,900, up from 79,800 in December 2023, indicating improved economic prospects for 2024.

Despite the increase in job vacancies, the ratio of vacancies to unemployed persons decreased from 1.74 in December 2023 to 1.56 in March 2024, attributed to a slight rise in unemployment. This ratio has steadily declined since peaking at 2.54 in June 2022.

Nevertheless, the labour market remained tight with more job vacancies than job seekers, added MOM.

MOM anticipated ongoing employment improvements driven by a brighter economic outlook for 2024, a sustained rise in job vacancies, and heightened hiring optimism among firms in the coming quarter.

However, MOM cautioned about lingering downside risks in the global economy.

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

MOM also emphasized the importance of Singapore continuing to attract highly skilled foreign workers to complement the resident workforce, thereby fostering economic growth and enhancing job opportunities.