SINGAPORE -The magnitude of employment losses in Singapore during the Covid-19 pandemic was unprecedented, more than in any other crisis, according to a report released by the Ministry of Trade and Industry (MTI) on Wednesday (Nov 24).
And while the services sector may have escaped previous crises, this time it was the hardest-hit.
By the third quarter of this year, the total number of people employed in Singapore (excluding foreign domestic workers) had dropped by a cumulative 196,400. Of this number, 113,500 were lost during the circuit breaker period in the second quarter of last year.
The pandemic thus surpassed the peak-to-trough employment declines of other crises, such as the dot-com bust which saw employment drop by 79,500, the Asian Financial Crisis by 42,100 and the Global Financial Crisis by 13,800.
MTI said in the report: “Unlike previous downturns, the Covid-19 pandemic simultaneously affected the Singapore economy through five transmission channels, especially in the earlier stages of the pandemic.”
These five channels included the plunge in international visitor arrivals and air travel which severely affected tourism and aviation-related sectors such as accommodation and air transport.
Additionally, domestic safe management measures and a fall in domestic consumption hit consumer-facing sectors such as retail trade and food and beverage services.
Externally, weak demand and supply chain disruptions also dampened the performance of outward-oriented sectors like wholesale trade and water transport for the most part of 2020.
Negative spillovers from the slowdown in domestic economic activity then led to lower demand in sectors such as real estate in 2020 and early 2021.
Finally, the report noted that manpower disruptions resulting from outbreaks in migrant worker dormitories, border restrictions and safe management measures in workplaces, weighed on sectors with a high dependence on migrant workers like construction and marine.
As a result of all these issues, employment contracted the most in food and beverage services with a plunge of 21,100, followed by wholesale trade.
But the impact of the pandemic was uneven across industries, as employment still rose in the information and communications, finance and insurance and professional services sectors over the same period.
This partly reflected the recovery in external demand towards the later part of 2020 and in 2021, the report said.
It also noted that these sectors were likely to have been less affected by workplace closures during the circuit breaker period and other periods of tightening, because staff could work from home.
The report also observed that non-resident workers cushioned citizens and permanent residents from employment losses.
“Although resident employment fell in the first half of 2020, it trended upwards subsequently and had surpassed pre-Covid levels by the fourth quarter of 2020,” MTI said.
“On the other hand, non-resident employment continued to contract between the second quarter of last year and this year, primarily due to ongoing border restrictions.”
It noted that Singapore’s overall unemployment rate remained relatively low compared with other economies.
At end-September, Singapore’s overall unemployment rate stood at 2.6 per cent, lower than the 4.8 per cent in the United States, 4.6 per cent in Britain, 4.5 per cent in Hong Kong, 3.4 per cent in Germany and 3 per cent in South Korea.
“We expect the labour market to continue on its recovery trajectory for the remainder of 2021 and 2022, in tandem with the economic recovery. Our advance estimates for the third quarter show continued momentum in the labour market,” said Mr Kenny Tan, divisional director of the manpower planning and policy division at the Ministry of Manpower.
“However … the recovery is uneven across sectors and downside risks still remain. So we continue to watch the labour market very closely, and press on with efforts under the SGUnited Jobs and Skills Package.”
OCBC chief economist Selena Ling said: “Employment outlook should improve with the re-opening of borders to allow foreign workers to enter. Wages are likely to accelerate to keep pace with inflation, especially for sectors that are in demand.”