SINGAPORE - At first glance, it's good news: The number of layoffs in Singapore fell in the third quarter, reversing the previous trend.
But market watchers told My Paper that this could actually be a cause for concern as companies could be holding on to workers simply because their hands are tied. Down the road, the bubble could burst, with more pain in its wake.
According to the latest figures released by the Ministry of Manpower, some 2,600 workers were laid off in the third quarter, down from the 3,080 in the previous quarter. This is also a decrease from the 2,850 in the same period last year.
Similarly, unemployment fell to 1.8 per cent in September, down from 2.1 per cent in June.
President of Singapore Human Resources Institute Erman Tan said that the reduction in the number of layoffs was due to the "labour-tight situation" Singapore currently finds itself in.
Mr Thomas Fernandez, vice-president of communications at the Association of Small and Medium Enterprises, said that laying off Singaporean workers could also affect the foreign-worker quotas that companies have to fulfil.
"Given today's tight labour market, many companies cannot afford to do that," he explained. Mr Fernandez added that it would not make sense for companies to lay off workers as many are staying in their current jobs, waiting for their year-end bonuses.
"This means that there is no available pool of people to recruit and replace those you have laid off," he said.
Companies that are holding on to workers for the wrong reasons - and not because the workers are productive - could be fighting a losing battle in the long term, said CIMB economist Song Seng Wun.
"Such companies could end up incurring high overheads in operating costs," said Mr Song, adding that it will hurt the business in the long run.
"It's not rational because Singapore is not the cheapest country to do business in," he said.
Still, Mr Song does not dismiss the possibility that companies may be keeping their employees because they are "looking forward to a positive outlook", even as the economy is restructuring.
For Ms Femke Hellemons, country manager of human-resource firm Adecco, the dip in the number of layoffs meant "optimism for the future".
"This is an indicator that there is growth. There is no need to retain people if there is no business," she said.
Still, Ms Hellemons stressed that employees should "remain competitive" by ensuring that they are "equipped with the skill sets that are in demand, and also look into upgrading and up-skilling themselves".
Yesterday, My Paper had reported that Singaporeans were more upbeat about their job prospects in the third quarter of the year, compared to the second quarter.
This was according to a Nielson report released on Wednesday, which stated that some 61 per cent of Singaporeans rated the state of their job prospects in the coming 12 months as good or excellent, up 9 percentage points from the second quarter.
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