The Ministry of Manpower has published its Labour Market 2014 report and at the same time, there are news reports on concerns from businesses about the manpower squeeze
Local employment has grown
The unemployment rate for Singapore has remained low at 2% with local employment (i.e. for Singaporeans) rising. There are also more vacancies, with almost 60 per cent of workers finding employment within 6 months of being retrenched. The report also noted that locals formed two in three of all persons in employment, with foreigners forming the remaining portion.
However, MOM has warned that the current growth in local employment is expected to be sustained. This links back again to our long-term problem of falling birth rates. As MOM stated, 1.1 locals are expected to enter the labour market in 2020 for each local exiting the market. This is compared to 2014’s 1.6. What we can hope for is that the Labour Force Participation Rate (LFPR) continues to remain stable or increases but we probably can’t hope for continuing local employment growth.
Businesses are still facing tough times
However, while there is some good news on the employment front, businesses are still battling with the manpower squeeze. With the current regulations on the numbers of foreigners allowed coming in and working here, Singapore will definitely not be able to reach the same economic growth heights of the 90s and 2000s. Instead, Singapore could face stagnation.
The question here is what are we willing to sacrifice? The tightening of the labour market has brought about a difficult choice – the social costs of having foreigners or economic growth. What we probably don’t realise is zero or even negative economic growth over a longer term period (e.g. 3-4 years) can actually bring down our annual income. Companies are not likely to pay big bonuses or even any bonuses at all if they are not making profits. That’s not to mention that even wage increments will be reduced. Difficult choices are ahead for our little country.