[SINGAPORE] The economy may have slowed down but the jobs creation machinery was still cranking overtime to produce a nearrecord number of jobs in the final quarter last year, pushing the unemployment rate down to a decade-low of 1.6 per cent.
Total employment jumped by 64,200 - up 9.5 per cent from a year earlier, the strongest increase since 1997, according to the latest figures released yesterday by the Ministry of Manpower. The employment number was within a whisker of the highest quarterly rise ever recorded, which was 64,400 in the second quarter of 2007.
Last quarter's employment numbers follow a gain of 58,600 jobs in the third quarter. It brought the jobs created for the full year to 236,600 - the biggest increase since 1997, when the series started.
Despite an anticipated slowdown in the economy in 2008, employers, unionists and economists expect jobs to continue growing strongly - at least in the first half of the year.
"Employers seem prepared to see through the slowdowns, presumably expecting them to be shortlived," said Robert Prior- Wandesforde of HSBC Bank in a report. "But the question is will they be right this time or will they eventually have to shed jobs as the cost pressures become too intense. Surely, job growth cannot continue at its current pace for too much longer."
According to him, jobs creation should have eased with the slowdown in the economy and escalating wage hikes, which deter hiring. But he pointed out that the link between Singapore's gross domestic product and employment growth has been very weak in recent years.
"The main surprise was manufacturing where another 11,000 jobs were added, up 9.5 per cent year-onyear, despite the fact that industrial production showed an average 0.7 per cent year-on-year contraction in the fourth quarter, judging by the monthly figures," Mr Prior-Wandesforde said. This suggests that productivity for the Singapore economy is falling in absolute terms while unit labour costs are surging. HSBC estimated that manufacturing productivity fell at a double- digit rate in the final quarter of 2007, while unit labour costs jumped by about 15 per cent.
"By any standards, this is an extraordinary rise, particularly for such an internationally exposed sector and, if sustained, will seriously threaten the competitiveness of the sector," Mr Prior-Wandesforde said.
With inflation rearing its ugly head, the tight labour market also raised the threat of a mini-wage price spiral, he warned.
All major sectors posted stronger job growth in the four quarter of 2007. Services continued to be the biggest jobs producer, registering employment gains of 39,500 - and 144,100 for the full year.
The booming construction sector added 13,200 jobs in the fourth quarter, bringing the total to 40,900 for 2007 - double the increase in 2006. Manufacturing employment rose 49,400 last year, supported by strong demand for workers in marine and offshore engineering.
For the full 2007, overall unemployment rate averaged 2.1 per cent, down sharply from 2.7 per cent in 2006 and 3.1 per cent in 2005.
Get the link to MOM's news release at www.businesstimes.com.sg
