ILO finds discouraged workers in Singapore

More than four million people around the world stopped looking for jobs last year, according to the International Labour Organization (ILO).

Discouraged workers: International Labour Organization report

The proportion of discouraged workers – who would rather be working but couldn’t find jobs – was particularly high in Singapore, as this chart shows.  It’s taken from the ILO’s newly released World of Work 2010 report, a labour market study from 2009 till the first quarter of 2010. The  chart is taken from the full report, which can be found here on the ILO website.

While the number of unemployed people in Singapore is small, those out of work are having a harder time finding new jobs than in 2007 and 2008, according to data from the Ministry of Manpower. You can see the figures at the end of this post.

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Singapore economy 2009: GDP and jobs

Construction was the only industry to post double-digit growth –16 per cent — when the Singapore economy shrank 2 per cent in the 2009 recession.

Business services also grew by 3.3 per cent. The only other (faintly) bright spot was information and communications, which grew an infinitesimal 0.8 per cent. Financial services didn't do too badly in the downturn, shrinking only 1.4 per cent.

The big dips came in two key sectors: manufacturing, which accounts for the biggest share of the gross domestic product, and the wholesale and retail trade, which contributes the second biggest share. Wholesale and retail shrank by 9.1 per cent and manufacturing by 4.1 per cent.

All the figures here are from the Economic Survey of 2009 released by the Ministry of Trade and Industry today.

SingaporeGDP_and_jobs2009

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SGD20.5b Resilience Package worked though only a fraction of GIC, Temasek losses

The Economic Survey of 2009, released today by the Ministry of Trade and Industry, notes how the government fought the recession.

The centrepiece of Budget 2009 was the 20.5 billion Singapore dollar (SGD20.5 billion) Resilience Package, it says.

The stimulus worked. Singapore is out of the recession with overall unemployment down to 2.1 per cent.

Employed_residents_by_indus

Among Singapore citizens and permanent residents, the  unemployment rate fell to 3 per cent from 5 per cent with an estimated 60,100 residents out of work in December 2009.

The SGD20.5 billion (about $14.5 billion) Resilience Package was not only effective but cost-effective. It was a shoestring operation compared with the business activities of the two Singapore sovereign wealth funds.

The survey mentions the SGD5.1 billion the government allocated to help preserve jobs for Singaporeans.

That was only a fraction of the 11 billion Swiss francs (about SGD14.2 billion) the Government of Singapore Investment Corporation (GIC) invested in the Swiss bank, UBS.

GIC's paper losses on UBS alone could total about 7.85 billion Swiss francs — more than the entire outlay to protect jobs. GIC's UBS shares are now worth only about 3.15 billion Swiss francs, according to the Straits Times.

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I don’t accept 2nd place for United States of America

Here's the full text of US President Barack Obama's State of the Union address. In this video clip, Obama says:

I realize that for every success story, there are other stories, of men and women who wake up with the anguish of not knowing where their next paycheck will come from; who send out resumes week after week and hear nothing in response. That is why jobs must be our number one focus in 2010, and that is why I am calling for a new jobs bill tonight.

I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. I am also proposing a new small business tax credit – one that will go to over one million small businesses who hire new workers or raise wages. While we're at it, let's also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment.

Next, we can put Americans to work today building the infrastructure of tomorrow. From the first railroads to the interstate highway system, our nation has always been built to compete. There's no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products.

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5.9% Singaporeans jobless, most new jobs are for less than three months

Consider yourself better off if you earn more than 2,600 Singapore dollars ($1,880) a month. For half the 1.99 million working Singaporeans and permanent residents earn less than that. And the majority of workers who found new jobs this year were hired on contracts for less than three months.

Let me quote from the Ministry of Manpower's Singapore Workforce, 2009 report released today:

Amid the global recession, the proportion of residents aged 25 to 64 in employment fell for the first time in six years to 75.8% in June 2009 from the peak of 77.0% a year ago. This mainly reflected the decline in employment rate for residents in the prime-working age group of 25 to 54 from 81.4% to 80.1%…

There were 5.9% or 116,300 persons (non-seasonally adjusted) in the resident labour force who were unemployed in June 2009, significantly higher than 4.0% or 76,200 a year ago. The rise was felt across all occupations and industries. The unemployment rate increased over the year from 4.3% to 7.1% for production & related workers; sharper than the increase from 5.8% to 7.6% for clerical, sales & service workers; and 2.5% to 3.9% for professionals, managers, executives & technicians.

The report says:

Even though it had decreased, the employment rate for prime-working age men in Singapore remained higher than in many developed and Asian economies…

The comparison with developed economies is not quite appropriate. For the unemployed in welfare states can seek social security. So they may register themselves as unemployed. That's not the case in Singapore.

Still, the government has done good work, saving as many jobs as possible by helping companies pay their workers through the jobs credit programme. More people might have lost their jobs if the government had not helped companies make payroll.

Most new jobs for less than three months

But that does not alter the fact that the labour market has become more uncertain.

Most of the new jobs created are not only temporary — but for less than three months. It's all there in the ministry report:

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Singapore rapid recovery ending, wages, hirings down, slow growth next year: MAS

The Singapore economy is set to slow down after two quarters of rapid growth, according to the Monetary Authority of Singapore (MAS).

MAS_macroeconomic_review_qu
The economy won't grow as rapidly as in the second quarter, when Singapore came out of recession, and in the third quarter when, according to advance estimates, the economy grew 0.8 percent over the same period last year — the first such growth in more than a year.

GDP growth in 2010 is expected to be slower than in previous post-recession periods, says MAS.

There is bad news for workers and job seekers.

Wage_cuts_MAS
Singapore pay cuts have been deeper than those in other Asian economies such as Japan, Hong Kong and Thailand, but less than that in Taiwan, says the MAS Macroeconomic Review which you can download here.

Wages declined in the first half of the year by an average of 3 percent year on year and are expected to go up by just 1.6 percent next year compared to the 4.9 percent average increments in 2007 and 2008.

More worryingly, job vacancy rates in all sectors remain well below their levels before the recession.

Overall,there were only 33 job openings per 100 jobseekers, compared to an average of 72 during the 2005-07 period.

And hirings are not likely to pick up much.

Three-quarters of the 635 firms polled intend to maintain headcount.

The outlook is most pessimistic for the manufacturing sector.

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Resilience Package cheaper than UBS, Citi stakes

The Singapore government has come out with a bold 20.5 billion Singapore dollar (S13.6 billion) Resilience Package to save jobs and fight the city state’s deepest recession since independence in 1965.

The massive stimulus package unveiled as part of this year’s budget today along with a corporate tax cut from 18 percent to 17 percent is unprecedented in Singapore’s history. It amounts to eight percent of the gross domestic product, reports Bloomberg.

For the first time the government is dipping into official reserves to draw 4.9 billion Singapore dollars for two schemes – Jobs Credit, giving employers cash grants to retain workers, and the Special Risk-Sharing Initiative, to stimulate bank lending.

The stimulus package, which will create an 8.7 billion Singapore dollar overall  budget balance deficit in the financial year 2009, is one of the largest yet announced by Asia-Pacific governments, reports AFP.

But the 20.5 billion Singapore dollar Resilience Package falls billions short of Singapore’s total investments in the troubled banking giants, Citigroup and UBS.

The Singapore sovereign wealth fund, Government of Singapore Investment Corporation (GIC) had invested about 11 billion Swiss francs (about $9.75 billion) in the Swiss bank UBS in December 2007 and $6.9 billion in US bank Citigroup in January 2008.

GIC manages Singapore’s foreign reserves.

This shows an international banking giant needs a much bigger investment than needed to stimulate an economy of 4.84 million people.

Singapore’s other sovereign wealth fund, Temasek Holdings, has invested $8.3 billion in another troubled US bank, Merrill Lynch, AFP reported in September.

GIC chief investment officer Ng Kok Song last September acknowledged that GIC had suffered some paper losses from its investment in UBS. GIC is also believed to have suffered some paper losses from its  investment in Citi, the Straits Times reported at the time.

Singapore Finance Minister Tharman said in his Budget speech today:

The Resilience Package will not get us out of the recession, as long as the global economy continues to contract. But it will help avert an even sharper downturn, and more lasting damage to the economy.

The Government will keep a close watch on the global situation and its impact on Singapore. We remain ready to undertake further measures if necessary over the course of the year and the next few years.

No doubt the government will do just.The 20.5 billion Singapore dollar Resilience Package includes 5.1 billion Singapore dollars to save jobs, 5.8 billion Singapore dollars to stimulate bank lending, 2.6 billion Singapore dollars to support households, another 2.6 billion Singapore dollars for business grants and tax measures, and 4.4 billion Singapore dollars to develop infrastructure and spend on education and health care. 

As part of the package comes into effect in March, it will increase the budget deficit to 2.2 billion Singapore dollars or 0.8 percent of the GDP for the current financial year 2008, the minister said. The overall budget balance deficit will increase to 8.7 billion Singapore dollars or 3.5 percent of the GDP in the new financial year 2009 after transfers to endowment and trust funds and contributions from Net Investment Returns, he added.

The government also cut corporate taxes for the second time in three years. Cut to 18 percent last year, now the maximum tax rate payable by companies will be 17 percent.

Hong Kong last year lowered its company tax rate by 1 percentage point to 16.5 percent.

Hope over fear, Singapore!

There is every reason to believe the Singapore government will choose hope over fear when it unveils this year's budget tomorrow.

The rose-coloured spectacles have fallen off at last that induced officials to think the economy might still grow this year, despite the global downturn.

Now the economy is expected to shrink sharply, by two to five percent, this year, says the Ministry of Trade and Industry, which only two weeks ago was predicting between one percent growth and a two percent decline in the economy.

It is astonishing how a smart government like Singapore's with a reputation for economic acumen could get things so wrong that it had to change its annual economic forecast only two weeks after making the prediction.

But the government has come out of denial now — and prepared to confront whatever the future holds, no matter how dark and uncertain it seems.

The hope now

And that gives hope. Bloomberg reports today:

Singapore said its economy may shrink an unprecedented five percent this year, fanning speculation the government will announce record spending in its budget tomorrow to help companies hurt by the global recession.

Finance Minister Tharman Shanmugaratnam may outlay as much as 20 billion Singapore dollars ($13.3 billion), or eight percent of the gross domestic product, to help households and businesses survive the slump, Macquarie Capital Securities predicts. The government may also say it plans to tap into its reserves for the first time to fund its expenditure.

As Franklin Delano Roosevelt said long ago: "The only thing we have to fear is fear itself."

Singapore's leaders, who include scholars and meritocrats, will be familiar with the quote — and know, from experience, that it's the truth.

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Singapore facing worst downturn in 40 years

“Singapore poised on the cusp of its worst downturn since independence,” says the Straits Times. That means it has never been so bad in more than 40 years since Singapore became independent in 1965.

The Singapore newspaper doesn’t go into further detail, but one only had to leaf through the pages yesterday. There are so few jobs that the paper didn’t publish the usual separate Saturday Recruit supplement yesterday, running the job ads with the other classified sections instead. It’s a terrible comedown from the good times when the Recruit supplement used to be a big fat pullout flush with ads on Saturdays.

Jobs available in Singapore

The current recession looks set to turn Singapore into a nation of teachers and civil servants. One out of five jobs available is in education and public administration, according to the latest survey. Fewer workers are needed in the construction and manufacturing industries. 

Out of the 36,000 jobs available in Singapore at the end of September, 7,700 were in education and public administration, according to the Ministry of Manpower’s third quarter survey. While 1,300 were clerical positions, the rest were for professionals, managers, executives and technicians (PMETs).

Singapore as a whole had more jobs available for PMETs (17,100) than for lower paid clerical, sales and service workers (9,000) and the lowest income group of production operators, cleaners and labourers (9,900).

But the bad news is there were fewer job openings in the main drivers of the economy: 6,400 in manufacturing, 2,700 in construction, 3,300 in wholesale and retail trade, another 2,700 in hotels and restaurants.

Also drying up are more lucrative or high-tech jobs – there were just 1,200 positions to fill in financial services, 1,000 in IT and other information services, and only 100 in telecommunications. There were 400 jobs in broadcasting and publishing. Real estate and leasing services had 1,100 openings and another 2,000 were in the transport and storage industries.

The growing healthcare and social services sector had 1,300 jobs to fill, including 700 for PMETs.

There were 3.3 percent jobless Singaporeans, up from 3.1 percent in the second quarter, but no increase in overall unemployment at 2.2 percent.

Singapore citizens and permanent residents make up 3.64 million of Singapore’s 4.84 million population – the rest are foreigners.

Sixty percent of the population or 2.93 million have jobs.

Average monthly earnings

Average monthly earnings in the third quarter were 3,307 Singapore dollars ($2,245), down by 0.9 percent, according to the Manpower Ministry's survey. All figures here are in Singapore dollars with the rise or fall in jobs indicated in brackets.

  • Manufacturing 3,311 (-0.9)
  • Construction 2,421 (-0.9)
  • Services as a whole 3,378 (-1.0)
  • Wholesale and retail trade 2,884 (-0.9)
  • Transport and storage 3,671 (-2.3)
  • Hotels and restaurants 1,282 (-1.5)
  • Information and communications 4,534 (-0.6)
  • Financial services 5,600 (-2.1)
  • Real estate and leasing services 2,790 (-2.0)
  • Professional services 4,299 (-1.4)
  • Administrative and support services 2,046 (-5.8)
  • Community, social and personal services 3,304 (-1.4)

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