For a tiny city-state known for importing labor to help sustain its US$300 billion economy, any surprise drop in Singapore’s job creation would have implications for wages, inflation and even monetary policy.
Employment unexpectedly fell by 6,100 between January and March, the first contraction since the second quarter of 2009, with jobs growth in the services sector down sharply and manufacturers cutting jobs against a backdrop of tepid economic growth.
However, wages are not falling. In fact, other data showed that the labor market remained tight, pointing to wage growth in a low inflation environment and supporting the case for steady monetary policy.
The drop in employment is probably more a reflection of the difficulties that companies face in hiring workers due to constraints on supply such as government restrictions on the hiring of foreign workers, rather than a decline in demand for labor, said Hayato Nakamura, Singapore-based senior economist for Bank of Tokyo-
Mitsubishi UFJ.
The ratio of job vacancies to unemployed persons rose to a 17-year high of 143 openings per 100 jobseekers in the first quarter.
Official data also showed that average monthly nominal earnings per worker in the period climbed 3 percent from a year earlier, compared with a 2.2 percent drop in the second quarter of 2009, the last time employment fell in a quarter.
Second-quarter jobs data are due to be released next month.
“Our clients continue to tell us that they struggle to find the talent that they need to drive their business to the next phase of growth,” said Michael Smith, Singapore-based manager for recruitment agency Randstad. “Which is another reason why they are prepared to pay a little bit more typically to attract the right people, and another reason why I’m a strong believer that we’ll see wage growth on average between 3 and 5 percent.”
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