Contrary to the latest reports of soaring economy boosted by the manufacturing sector, manufacturing jobs have actually dropped their numbers while the unemployment number crept up by 0.1 of a percentage point to 2.3 and 3.3 per cent respectively in June.
According to the latest figures released by Ministry of Manpower, job gains in the second quarter of the year slipped to 26,500.
The first quarter of the year reported job gains of 36,500.Layoffs were reduced from 1,800 to 1,700 at the same time. Although there were 1,800 new jobs created in the construction sector, the number of manufacturing jobs dropped by 2,400 from the first quarter of the year. The construction sector lost 400 jobs in the first quarter of the year.
However, Manpower Minister Gan Kim Yong and private sector economists were quick to point out that the jobless rate in the manufacturing sector is balanced by an increase of new workers into the labour market. Students who have just graduated from schools, polytechnics and universities form a focus of this group.
'The slight rise in unemployment in 2Q/10 reflected more job seekers - graduates as well as students during their mid-year school break - entering the labour market,' said Song Seng Wun of CIMB. Mr Song believes that these new workers need not wait long to be hired, as the job market is strong. He added that the residential employment would drop in the second half of the year when many of the students return to classes after the school break. Mr Song forecasted that the job market expansion in the next few quarters will push employment below 2 per cent by the end of the year.
Writing in the Manpower Blog, Mr Gan agrees: “Looking ahead, the unemployment appears to have broadly stabilised and the labour market outlook for 2010 is optimistic.”
Citigroup’s Kit Wei Zheng, however, finds the job cuts in manufacturing at odds with anecdotal reports of overtime hiring and new capacity additions in manufacturing and thinks there may be a deeper problem sitting in the structural adjustments.
“This surprising weakness could be more structural than cyclical, reflecting job losses due to ongoing relocation that could have picked up as (the) Jobs Credit (Scheme) lapsed,” said Mr Kit. Still, Mr Kit is optimistic about the job market as the polls of employers had indicated upcoming stronger recruitment. “The slowdown in services jobs creation could reflect hiring difficulties, rather than softer demand,” he said. “Hiring difficulties could stem from picky job seekers and stricter enforcement of the foreign employment quota.” Mr Kit also thinks that the drop in the job market does not allude to a retarding labour market. “This is reinforced by the continued fall in redundancies, even in manufacturing,” he added. 27,400 jobs were created in the service sector in the second quarter. Although this figure is lower than the 33,400 jobs in the first quarter, all employment gains are in the second quarter. Mr Song said the dipping figures may be attributed to Seagate’s disk drive production plant winding down, but says that the worst is probably over for the sector as investment commitments in the manufacturing sector is stabilising. He also sees a surge of jobs from the services sector, saying: “We expect the economy to create 140,000-150,000 new jobs this year, of which the bulk (120,000) will be in services.” Mr Kit has also projected employment to rise by about 150,000 in 2010.
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