Singapore’s GDP growth better than expected, but are Singaporeans benefitting?

TL;DR – Can we all breathe a bit easier now?

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According to advance estimates from the Ministry of Trade and Industry (MTI), Singapore’s GDP grew by 2.5% in the first quarter of this year compared to the same period a year ago. That is slightly higher than the median forecast of 2.4% in a Reuter’s poll. Singapore’s manufacturing sector also did well, growing at a 6.6% compared to the same period a year ago. According to Maybank Kim Eng economist Chua Hak Bin, those are quite healthy numbers.

Does it mean that Singapore’s economy is finally out of the woods? Can we all breathe a bit easier? Can we be a little bit more assured that our jobs are secured? Can we all loosen our belts a little bit?

We think it’s premature to celebrate or to let our guard down. Why? Because we don’t yet know whether the economic growth translates to growth in employment or median incomes.

The data from MOM’s Labour Market Report 2016 wasn’t exactly encouraging. Here are some key points from that report:

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    1. The unemployment rate of citizens in 2016 was 3.1%, the highest it has been since 2010 (it was 3.4% in 2010). The long-term unemployment rate of residents rose from 0.6% in 2015 to 0.8% in 2016. The increase was broad-based across most age and education groups. In addition, the long term unemployment rate for degree holders rose to 1.0% in 2016, the highest since 2004.

 

    1. The number of job vacancies (seasonally-adjusted) continued to decline to a four-year low of 47,600 in December 2016. Coupled with the increase in unemployed persons, the seasonally adjusted ratio of job vacancies to unemployed persons fell from 91 openings per 100 job seekers in September 2016 to 77 in December 2016, the lowest since September 2009.

 

    1. Year-on-year, the nominal median income (including employer CPF contributions) of full-time employed Singaporeans rose by only 1.3% in real terms (after adjusting for inflation). This was a sharp slowdown from the increase of 7.0% in 2015.

 

The outlook for 2017 doesn’t look any better.

Preliminary estimates showed that the seasonally adjusted unemployment rate for citizens is 3.5% at the end of March 2017. Also, 4,800 workers were laid off in the first quarter of 2017, lower than the fourth quarter (5,440), but similar to a year ago (4,710).

The numbers don’t show a clear trend of recovery. Instead, they suggest that the unemployment rate may still creep up.

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The labour market trend for the rest of 2017 and beyond is important. Because what good is it for the economy to grow if Singaporeans don’t get good jobs that pay good salaries?

But how do we ensure that Singaporeans are able to get good jobs that pay good salaries as our economy restructures? As our economy restructures, jobs will be lost. But new jobs in other areas will be created. Singaporean employees will need to face the reality that they may have to switch many careers throughout their entire working life. The government will need to help Singaporeans adapt and grow.

To do that, the government is doing three things.

1. Minimising missed matches

There are employers who are having a hard time looking for Singaporean employees. And there may well be Singaporeans who have the skills required for those jobs but, for some reasons, don’t know about those jobs. This is a problem of missed matches. The first thing the government is doing is to solve this problem of missed matches.

There are, again, three things that the government is doing.

Firstly, there are five career centres operated by the Employment and Employability Institute (e2i) and Workforce Singapore (WSG). These career centres provide Singaporeans with various career resources.

In fact, Singaporeans can now access even more touchpoints for help. Amidst the labour movement’s May Day messages is this interesting new development, U Career Network. This network not only has career coaches, but also volunteers and ambassadors who can direct their peers to job and training resources, as well as industry mentors to share their expertise at talks for students and workers. The U Career Network is set up by e2i, which is part of NTUC.

According to information on the e2i website,

U Career Network will include community partners from People’s Association, Community Development Councils and Self-help Groups; Education and Career Guidance Counsellors, student leaders, and lecturers from Institutes of Higher Learning (IHLs); representatives from the various NTUC Communities and the U Network like affiliated unions and associations, professional networks, U SME partners and U FSE (freelancers and self-employed) partners.

Secondly, the government also organised Singapore’s first virtual career fair that targets mostly white-collar jobseekers last Setepmber. The two-week-long career fair aimed to help jobseekers expand their network and connect with potential employers online. Fifty-one employers from sectors such as info-communications and technology (ICT), aerospace, and biomedical sciences were offering up to 500 vacancies through the fair. More and improved versions of such virtual career fairs will be organised.

Thirdly, WSG has also signed up two overseas placement companies in a pilot project to expand WSG’s suite of career-matching services. Minister Lim explained that these agencies — with established records working with the governments of countries such as Australia and the United States — were chosen “because of their business focus on active … rather than passive jobseekers, where the jobs are looking for the workers”.

2. Minimising mismatches

But there may be Singaporeans who can’t change jobs because of mismatches in salary expectations or skills. To minimise these mismatches, the government is doing two things.

Firstly, to address the mismatch in salary expectations of people who are changing careers, the government has the Career Support Programme (CSP). As a worker moves into a new career, he might need some time to settle into the job. During that time, the employer may not be willing to pay the salary that the worker expects.

This is where the CSP comes in. It is a salary support programme to encourage employers to hire PMETs in new jobs without requiring the PMETs to accept too large a pay cut. The CSP provides companies with a salary support of up to a cap of $42,000, for up to 18 months when they hire eligible Singapore Citizen PMETs.

Secondly, to address the mismatch in skills, the government has the Professional Conversion Programmes (PCPs). These programmes are career conversion programmes targeted at PMETs, including mid-career switchers, to undergo skills conversion and move into new occupations or sectors that have good prospects and opportunities for progression.

There are two types of PCPs:

  • Place-and-Train: PMET is hired by a participating employer before undergoing training to take on new job role.
  • Attach-and-Train: PMET is provided with training and work attachments, in advance of job placement, through industry partners in growth sectors with good future job opportunities.

PMETs going through the PCPs will receive training, which they don’t have to pay for. They will also receive a salary of up to $6,000 (if they are on the Place-and-Train type of PCP) or a training allowance of up to $4,000 (if they are on the Attach-and-Train type of PCP).

3. Supporting progressive employers

The government is also helping Singaporeans change jobs without even having to be unemployed at all. This is done by encouraging companies to retrain their staff to take on higher value add work. To do that, the government has the Human Capital Partnership Programme (HCP).

The HCP supports employers who are committed to investing in Singaporean workers at all levels in an inclusive way, developing stronger complementarity between local and foreign manpower, and transferring skills from foreign to local manpower to enhance capabilities of the local workforce.

It encourages employers to train and develop the skills of Singaporean workers to meet the needs and challenges of an evolving economy. This ensures that Singaporean workers can continue to add value as our economy restructures and thus be able to justify a reasonably good salary.

Yes, we can

These programmes sound good. Do they work? It’s too early to say conclusively that they do. But there  are reasons to hope.

Take for instance Panasonic. It recently shifted its global HQ of its refrigeration compressor business unit to Singapore. It is also transforming its manufacturing plant in Singapore into a digitally enabled factory with automated guided vehicles for transportation of parts, a centralised storage area and consolidated operations.

The transformation of Panasonic’s manufacturing plant will see its manpower needs reduce by 30%. However, it won’t have to retrench any Singaporean workers. Instead, it will not renew the contracts of foreign workers. And they will not have to hire more Singaporeans to replace those who leave by retirement or natural attrition.

For the Singaporean staff who stay on, they will be retrained to operate the transformed manufacturing plant. Panasonic expects that after the retraining, the median wage of its workers will increase by 30%.

We hope that Panasonic’s example will become more commonplace in Singapore – more companies becoming more productive, helping workers improve their skills, and sharing the productivity gains with workers, resulting in salary increases for workers. We believe that it’s something we can achieve.



Author: Jake Koh

Recovering sushi addict, I'm a man of mystery and power, whose power is exceeded only by his mystery.


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