PUBLISHED ONOctober 28, 2016 6:00 AMByChia Yan Min
Singapore's labour market faces challenging times ahead, and not just because of the slowing economy.
The lacklustre sentiment has stunted job creation and prompted a wave of layoffs in the hardest-hit sectors, but more worrying is the prospect that an unemployment rate higher than what Singaporeans are used to might become the new normal.
Singapore's unemployment rate - which now stands at 2.1 per cent - has for decades been low by international standards.
But it might be on track to rise in the face of unrelenting technological change that leaves old skills outmoded. The ones relevant to new realities may take a while to acquire.
In the short run, the slowing economy will remain a key contributor to downbeat labour market sentiment.
Data out yesterday showed that total employment fell for the second time since the 2009 global financial crisis.
Layoffs fell slightly in the third quarter to 4,100, down from 4,800 in the previous three months.
But with "subdued global economic conditions and internal economic restructuring", more workers were affected than the 3,460 who lost their jobs in the third quarter a year ago, said the Ministry of Manpower.
Beyond the current downturn, however, some structural challenges will persist for a longer time - including the gulf between the skills workers have and the ones that employers want.
In its latest macroeconomic review, the Monetary Authority of Singapore said skills mismatches in the labour market are on the rise.
These are leaving laid-off workers - especially professionals, managers, executives and technicians (PMET) - struggling to find new jobs, the central bank noted.
Disruptive change has hit almost every industry, and jobs are evolving faster than ever.
In addition, the Singapore economy is increasingly moving towards higher value-added, niche sectors - such as medical technology and data analytics - in a bid to maintain its competitive edge.
These provide good jobs, but require specialised skills that most retrenched PMETs do not have.
These industries also offer fewer jobs, given their small, specialised nature.
This means Singapore might have to get used to a higher rate of structural unemployment - caused by a mismatch between workers' skills and those demanded by employers.
To adapt, workers can keep a lookout for opportunities to deepen and extend their own skills, said SIM University economist Walter Theseira.
"It is going to be very hard for the Government or employers to force workers down a particular skills pathway, because everyone has different abilities and it won't work if you force people to take up training that they are not interested in or unsuited for."
Dr Theseira suggested that policymakers aim to ease this "adjustment burden" by subsidising wage costs.
"I would also look into rewarding employers who do actually show willingness to take on middle-aged and older PMETs, because our economy needs the contributions from our mature workers.
"We can't afford to have persistent long-term unemployment of our skilled workers," he added.
This article was first published on Oct 28, 2016.
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