Subdued employment demand and reduced tightness in the labour market - the leading reasons helping ease wage pressures on employers this year.
Salary growth for residents (citizens and PRs) is expected to moderate to about 2.5-3% this year, down from 3.5% in 2015, which was slightly below the 10-year historical average of 3.6%.
Salary increments will, however, be stronger in sectors such as community, social and personal services (CSP), owing to higher vacancy rates. Similarly, wage growth is expected to be lower in sectors with greater slack, such as manufacturing.
This trend was evident in 2015 as well, where external-oriented sectors such as manufacturing, financial and insurance, and wholesale trade saw lower salary increments - compared to domestic-oriented sectors where 2015 wage gains were higher.
Q4 2015 saw labour productivity rising by 0.5% y-o-y, but adjusting for actual hours worked, labour productivity growth was 1.0% in 2015, largely unchanged from 1.1% in 2014.
With muted wage growth and a projected slight improvement in productivity, Monetary Authority of Singapore (MAS) says the pace of increase in unit labour cost (ULC) should slow in 2016, in its Macroeconomic Review.
Job creation will remain sluggish
MAS noted that both labour demand and supply in the economy are settling at permanently lower levels, in line with the moderation in Singapore’s trend GDP growth and ageing population.
As a result, restructuring and consolidation is ongoign in sectors such as manufacturing and retail trade.
Alongside the fall in labour demand, there has been a reduction in foreign labour supply growth, while the supply of resident workers grew at a fairly stable pace.
Total job creation this year is expected to stay modest. MAS anticipates redundancies could continue to rise in sectors facing weak external demand or undergoing restructuring.
MAS also reported on employment and hiring data across sectors:
- Total employment expanded by 28,700 in H2 2015, substantially below the 74,100 jobs added in the corresponding period a year ago.
- Headcount in the external-oriented sectors has been declining since H1 2015, most evident in manufacturing. The electronics industry was also affected by restructuring, while hiring in marine and offshore engineering was pulled down by lower oil prices.
- Hiring in the domestic-oriented sectors more than doubled to 33,600 workers in H2 2015, relative to H1 2015, most apparent in retail trade, and food and beverages.
- Firms in real estate industry started to hire again, after cutting 5,300 jobs in H1 2015. However, the number of jobs added was small (around 200).
- The CSP services sector reported strong hiring of about 11,900 workers in H2 2015.
- Overall, resident employment rose in H2 2015, with net gains of 9,600 compared to the 8,900 net job losses in H1 2015. The majority of these gains were in industries where temporary hires are prevalent, such as accommodation and food services, administrative, and retail trade.
Speaking to Human Resources on trends in the real estate sector, Hari Krishnan, president and chief business officer of PropertyGuru, noted the sector has been going through a period of correction driven by multiple rounds of Government-mandated cooling measures since 2013.
"As a result, the number of registered real estate agents has dropped from 31,783 (as of 1 Jan 2014) to 29,262 (as of 1 Jan 2016). In 2015 itself, 3,573 agents had left the industry, according to the Council for Estate Agencies. 104 property agencies also closed down last year," he cites.
He adds on the hiring outlook: "For PropertyGuru, we are seeing an increased thirst for data and insights in the industry, as well as rich property-related content and experience. To cater to this demand, we are looking at beefing up our data and content teams."
However, his number one concern is to find quality talent, at a speed to support ambitious growth objectives. "Entrepreneurial and technology talent remain scarce and expensive in this region," he noted.