Labour market recovery in S’pore could be hit by heightened restrictions, Delta-variant cases

SINGAPORE – The heightened domestic Covid-19 restrictions and multiplying coronavirus infections globally due to the highly contagious Delta variant could put the brakes on Singapore’s labour market recovery, observers told The Straits Times.

Total employment, excluding migrant domestic workers, fell by 15,700 in the second quarter of this year, according to a report of preliminary estimates by the Manpower Ministry (MOM) published on Friday (July 30).

This is after total employment recorded its first increase in the previous quarter, following four quarters of decline.

Permanent Secretary for Manpower Aubeck Kam said: “There was modest growth in resident employment in the second quarter. But it was offset by the continued decline in non-resident employment as some foreign workers complete their contracts and leave, and we face challenges in facilitating the entry of foreign workers because of public health considerations.”

However, unemployment rates eased further last month, despite remaining elevated compared with pre-pandemic levels, said MOM. Since peaking last September, the rates have been falling steadily.

Experts noted that while the latest data is still encouraging, it is unlikely that the labour market will recover to pre-pandemic levels soon.

Mr Samuel Gan, senior vice-president for capital markets at digital securities exchange ADDX, expects unemployment to continue trending lower in the second half, as Singapore achieves its vaccination targets and eases restrictions.

“However, the impact of the Delta variant and the expiry of Government support measures in the coming quarters present downside risks to the employment outlook,” he added.

Meanwhile, tightened measures and the rise in Covid-19 cases globally may have dampened hiring sentiments, the report highlighted.

About 64 per cent of firms polled by MOM last month said they had plans to hire, down from 73 per cent in March. About one in three firms intended to raise wages within the next three months.

But analysts are concerned about the consequences of prolonged heightened restrictions.

Maybank Kim Eng economist Chua Hak Bin said some firms may have depleted their cash reserves during this period and decided to cut headcount to survive.

Experts pointed out that suspension of hiring from high-risk countries, where Covid-19 incidence remains high, contributes to the decline in foreign employment.

Dr Chua said: “Growth recovery may run out of steam in the second half, if hiring continues to be hindered by heightened measures and stricter border controls.”

Associate Professor Lawrence Loh from the National University of Singapore Business School urged jobseekers to be flexible in taking on employment, adding that roles will evolve in the new normal as businesses transform themselves.