TOC asks financial expert and analyst, Mr Leong Sze Hian, to help make sense of the latest slew of statistics from the Ministry of Manpower.
TOC: We’ve been bombarded with government statistics lately on the state of the economy. In simple terms, how bad is the economy and job outlook right now?
Leong Sze Hian: Singapore is experiencing in a sense, a quintuple whammy – record high inflation, lesser jobs for locals, declining real wages, declining productivity and rising labour and business costs.
TOC: The hiring of PMETs seem to be hardest hit – hiring was just 1.2 per cent from October to December 2008. The govt and the NTUC mentioned this group which needed help. Have the help schemes done what they should?
Leong Sze Hian: I think the data speaks for itself – according to the MOM’s latest Labour Market 2008 report, Employment Change (growth in employment) for locals (citizens and PRs) as a percentage change declined from 38 per cent in 2007 to 29 per cent in 2008.
The percentage of foreigners to total employment has increased to 36 per cent. Whilst local employment grew by 64,700 or 3.5 per cent in 2008, foreign employment grew by 156,900 (or 17%) in 2008, up from 144,500 (or 19%) in 2007. (See Chart One below.)
So, without the break-down of data for jobs to Singaporean PMETs, it may be somewhat difficult to assess the effectiveness of the help schemes, and how hard they are being hit.
TOC: In light of the extensive publicity over the Jobs Credit Schemes, it looks like the scheme hasn’t stopped employers from firing workers, as it was supposed to. What’s going on here?
Leong Sze Hian: About 73,100 residents were unemployed in December 2008, a 58 per cent jump year-on-year, excluding job losses since 1 January 2009, for which the data is still not available yet.
If the jobs created can be broken down to citizens and PRs for 2004 to 2006, why can’t the unemployment data be broken down too?
Year-on-year, Singapore’s net employment outlook for the second quarter plunged 99 percentage points.
TOC: The manufacturing and financial industry, and in the storage and transport sectors, are all hit by the downturn. What can the government do?
Leong Sze Hian: Singapore’s Consumer Price Index (CPI) for general households climbed 6.5 per cent in 2008 – its highest level in 28 years, with the poor being the hardest hit at 7.4 per cent. I suggest we explore measures to stimulate consumption and reduce fear and uncertainty, such as aggressively reducing GST, fees, costs, aggressively increasing financial assistance to the lower-income, etc.
TOC: What can employees do? Should they switch to the services sector which is said to be still hiring?
Leong Sze Hian: The problem is how does one know that the expected jobs will still be available after one has gone through re-training?
I think it is already hard enough for Singaporeans to face the uncertainties of a recession. We should not have to bear the extra anxiety and uncertainty of not knowing the break-down in the employment statistics (citizens, PRs and foreigners) as well. How many of the projected services sector jobs will go to foreigners and PRs, relative to Singaporeans?
Leong Sze Hian: The data speaks for itself – those aged 40 and over comprised 43.3 per cent of all unemployed residents.
TOC: As for new graduates, the MAS recently announced a $15 million scheme whereby the MAS will, effectively, pay for part of the starting salaries of these graduates hired by the banks and financial institutions. It’s almost the same as the Jobs Credit Scheme. Do you see MAS’ approach working or do you think it will work?
Leong Sze Hian: The subject of jobs may arguably be the subject of most pressing concern for Singaporeans now. The $15 million scheme will help to employ some graduates – the question is how many will be Singaporeans?
In this connection, in 2006, 52 per cent of jobs created went to residents, of which 37 per cent went to citizens and the balance 15 per cent to PRs.
In 2007, the percentage of jobs created that went to residents declined to 38 per cent. Of this, what percentage went to Singaporeans?
Now, in the MOM’s latest report, the percentage of jobs created that went to residents has declined further to 31 per cent. So, how many per cent went to Singaporeans? (See Chart Two below)
TOC: In your view, how long do you think these bad times will last?
Leong Sze Hian: Nobody knows, but the following statistics may underscore the severity of the problem:-
The latest Manpower Employment Outlook Survey says that Singapore has the worst jobs market outlook among the 33 countries in the Manpower poll.
Although earnings growth in 2008 was 5.4 per cent, after discounting for inflation of 6.5 per cent, real earnings declined by 1.1 per cent in 2008.
Labour productivity fell by 12% in Q4 08, deeper than the drop of 9.0% in the preceding quarter. In 2008, productivity slid by 7.8%, following the decline of 0.8% in 2007.
The overall unit labour cost (ULC) rose for the eleventh straight quarter, with the increase accelerating to 12% in Q4 08 from the 10% in the preceding quarter. In 2008, overall ULC rose to 9.6%, higher than the increase of 5.2% in 2007.
Unit Business Cost (UBC) rose by 8.2% in 2008, higher than the rise of 2.5% in the year before.
In view of the above statistics, I would like to suggest that we review our labour and economic policies, to address and reverse the above unhealthy statistical trends, which may help to accelerate the recovery.