Singapore's Job Market Shows Mixed Signals: Vacancies Up, Unemployment Also Rises

In the latest update from Singapore's Ministry of Manpower (MOM), a paradox emerges in the labor market: while job vacancies have increased, so has the number of unemployed individuals. As of March 2024, job vacancies rose to 81,900 from 79,800 in December 2023, suggesting a boost in economic prospects for the year.

Despite this rise in vacancies, the ratio of job vacancies to unemployed persons has decreased from 1.74 in December 2023 to 1.56 in March 2024, due to a slight rise in unemployment rates. This decline in the vacancy-to-unemployment ratio, from its peak of 2.54 in June 2022, indicates a tightening labor market, though still more vacancies exist than job seekers.

Sector-Specific Growth and Challenges

High-growth sectors such as health and social services, information and communications, professional services, and financial and insurance services are contributing significantly to the rise in vacancies, making up nearly one-third of all job openings. However, the labor market's complexity is also highlighted by a decline in the number of retrenchments, which fell for the second consecutive quarter from 3,460 in Q4 2023 to 3,030 in Q1 2024. This is lower than pre-pandemic levels, indicating some stabilization in the job market.

Demographic Challenges

The resident long-term unemployment rate has seen a slight increase from 0.7% in December 2023 to 0.8% in March 2024. Notably, this rise is more pronounced among those under 30 and those over 60 years of age. This suggests challenges such as younger individuals holding out for better job opportunities or exploring different career options post-graduation, and stability in long-term unemployment rates among older residents.

Employment Trends

While overall unemployment rates have increased slightly, the number of employed foreigners has decreased for the first time since Q3 2021, primarily driven by sectors like construction and manufacturing which are facing new foreign worker quotas. On the other hand, employment among Singaporeans and permanent residents has seen growth, particularly in sectors aligned with public services and financial services.

Future Outlook

Experts like DBS Bank economist Chua Han Teng suggest that a less tight labor market coupled with moderate wage increase intentions by employers could help contain business costs and support a continued easing of core inflation throughout 2024. OCBC Bank's chief economist, Selena Ling, notes that while the labor market is cooling from a strong position, the shift is not expected to lead to sustained increases in the unemployment rate. However, she cautions that wage growth may be tempered moving forward, posing challenges in keeping pace with inflation.

This complex scenario presents both opportunities and challenges. As sectors like AI and cloud computing continue to grow, the demand for specialized skills may lead to more job churn, underscoring the need for workers to adapt to the evolving demands of the job market.