However, the improvement in unemployment is likely to be short-lived as this year’s cohort of tertiary graduates enters the labour market in the middle of the year when continuing weakness in the economy starts to crimp demand for workers.

  Reflecting the downturn in the global electronics cycle and the weaker US economic growth, 3,248 workers were retrenched in the first quarter of 2001. This was significantly higher than the quarterly average of 1,900 registered in the last three quarters of 2000 but still below the 7,000 to 8,000 laid off per quarter in 1998 during the Asian crisis. Retrenchment is expected to rise further in the coming months, as some of the lay-offs announced earlier will only be taking place later in the year.

  Job vacancies¹, both in terms of number and rate (i.e. vacancies expressed as a percentage of total staff demand) fell significantly to 19,755 and 1.9% respectively in March 2001, from 22,115 and 2.2% three months ago. The figures were also substantially lower than those recorded in the same period last year (26,182 and 2.7% respectively). With job openings shrinking more than job seekers, the seasonally adjusted job vacancies to unemployed persons ratio slid to 0.76 (i.e. 76 job openings for every 100 job seekers) in March 2001 from the height of 1.14 in September 2000 in the last three years. Prior to the economic downturn, the ratio was around 2:1. The drop in ratio below 1 indicates that there are fewer job openings than job seekers, pointing to the slackness in the labour market.

Employment Outlook

  Business expectations surveys conducted by the Department of Statistics and the Economic Development Board warned of further deterioration in business conditions for manufacturers, suggesting dismal employment prospects ahead. A net balance of manufacturers expect to cut staff in the second quarter this year, especially the electronics and precision engineering firms which were hit by the global electronics downswing. Only transport engineering is sanguine about job creation on the back of expected increase in marine and aviation activities in the second quarter.

  The business outlook for the services sector was generally more positive with firms in transport & storage services, financial services and real estate expecting business to pick up. Correspondingly, a net balance of employers, especially among transport & storage providers, investment banks and insurance companies expect to hire workers in the second quarter of 2001.

  Overall, manpower demand will falter if economic conditions continue to soften and the weaknesses spill over to services. A drop in job advertisements in the local media by 20% in April 2001 from the preceding month (or around 30% from a year ago) heralds the weaker employment prospects ahead.

Ministry Of Manpower Press Release 13 Jun 2001