by Lee Chin Wee
THE Labour Market Report 2016 released today (Mar 15) revealed that the annual average resident unemployment rate rose to 3.0 in 2016, after holding steady at 2.8 per cent for the last four years. This is the highest figure since 2010, when the resident unemployment rate was 3.1 per cent.
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Compared to data from 2015, residents aged 30 – 39 (2.3 per cent unemployed, up from 1.9 per cent), and 50 & over (2.7 per cent unemployed, up from 2.4 per cent) were particularly affected, while those aged 29 & below saw the unemployment rate decrease from 5.1 per cent to 5.0 per cent.
Part of the high unemployment rate can be explained by seasonal and frictional unemployment due to the cyclical nature of the global economy. Singapore tends to be buffeted by forces outside our control. The manufacturing sector, for instance, shed 15,500 jobs in 2016 because of flagging global demand for products. This figure would have been far worse, had it not been for the manufacturing sector unexpectedly expanding by 6.4 per cent in Q4 2016. Plunging oil prices have also badly affected the offshore marine industry, with retrenchments picking up in 2015-16. One would expect unemployment figures to improve as the global economy recovers.
However, the unemployment rate can also be attributed to structural unemployment: As Singapore adjusts to the disruptive impacts of new technology on traditional businesses, people’s skills no longer match up to market demand. Singapore’s continued economic transformation, therefore, may lead to underskilled or wrongly-skilled workers left by the wayside. As firms reorganise and restructure to become manpower-lean, longstanding jobs like accounting and secretarial work may be cut, while new business interests – financial technologies, for instance – are developed.
There are now 17,000 long-term resident unemployed (refers to those unemployed for more than 25 weeks), compared to 12,700 in 2015. This figure is the highest since 2009, when the 2008 Financial Crisis led to thousands of Singaporeans losing their jobs.
Most worryingly, the long-term unemployment rate for degree holders rose to 1.0 per cent in 2016, the highest since 2004. Does this mean that more university graduates now hold paper qualifications that are ill-suited for the modern economy? Possibly. A bachelor’s degree in programming or software engineering received 10 years ago, for instance, may bear little relevance to the sought-after skills of today. Without a constant push for skills upgrading and on-the-job training, many graduates will find themselves either underemployed, or out of work.
As the economy becomes more complex, the need for specialised skills has soared. This has challenged the traditional view that higher education guarantees a stable career, as demand for specialised skills can change overnight with the introduction of new technology or sudden industry transformation. Professionals, Managers, Executives and Technicians (PMETs) formed 75 per cent of all residents made redundant in 4Q 2016 – a disproportionate figure.
Statistics seem to suggest that there is a growing mismatch between employee skills and job requirements; especially at white-collar managerial and technical levels. And even when tertiary-level education does meet market demand, the rapidly-evolving jobs landscape means that employees must be willing to continually upgrade themselves. Given this context, policies to help workers gain new skills or encourage businesses to leverage new technology are extremely important.
Whether Singapore will be able to bounce back stronger from this period of slowing growth and higher unemployment depends on how well we can react to technological disruption. If our workers and businesses do not stay ahead of the curve, one should be prepared for more grim news ahead.
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