EMPLOYMENT SITUATION

Mr Harun A. Ghani asked the Minister for Manpower if he will give an update on the employment situation since January 1999 to date, in particular, (a) how many new jobs were created; (b) how many jobs were lost; and (c) whether workers can expect to see better job prospects for the rest of 1999.

The Minister for Manpower (Dr Lee Boon Yang): Mr Speaker, Sir, the labour market has shown signs of strengthening in the first half of 1999. In tandem with the pick up in economic activities, total employment rose by an estimated 15,400 in the second quarter of 1999. This is the first quarterly increase in employment after declining for four consecutive quarters. For the first half of this year, the total employment gain was 5,800. In other words, jobs created exceeded jobs lost by 5,800. This was a sharp contrast to the net job loss of 26,600 in the second half of 1998 when the impact of the economic downturn on the labour market was most severe.

Unlike in the previous quarter, nearly all major sectors registered increases in employment in the second quarter of 1999. The employment gains came mainly from the real estate and business services with an estimated net job creation of 8,000, followed by manufacturing at 3,900, financial services at 1,400, hotels and restaurants at 1,200, and transport and communications at 1,000. Employment also rose by 4,300 in the other services sectors covering education, health, domestic and other community, social and personal services. In the construction sector, employment continued to contract for the fourth consecutive quarter. However, the net loss of 4,200 construction jobs was significantly less than the 10,500 in the preceding quarter.

Preliminary findings from a survey of private sector establishments with at least 25 employees showed that about 3,300 workers were retrenched in the second quarter of 1999. This is close to the 3,400 displaced in the previous quarter. With the pick up in the economy, the number of workers retrenched in the first quarter of this year has fallen to 6,700, less than half of the 14,600 laid off in the second half of 1998.

Recent economic indicators have been very encouraging. Manufacturing output grew by a healthy 10.4% in the first six months of the year compared with the same period last year. Non-oil domestic exports also rebounded with an increase of 10.3% in the second quarter of this year. While the economic situation has certainly improved, the recovery can only be sustained if there is continued strength in the developed economies and a benign environment in the region.

As the economic recovery gathers momentum, this would have a positive impact on the labour market. We can expect demand for workers to increase while retrenchment is likely to moderate. Nevertheless, there would still be some retrenchments as companies upgrade or restructure to remain competitive. Lower educated workers who lack the necessary skills will remain vulnerable as industries move towards higher value added activities. Workers must not be complacent. They must continue to upgrade themselves to ensure that they are able to take up new jobs that are being created as the economy recovers. That is why my Ministry will continue to support skills upgrading programmes such as the Skills Redevelopment Programme.

Mr Hawazi Daipi (Sembawang): What is the total number of retrenchment expected this year and which sectors would contribute mostly to this retrenchment?

Dr Lee Boon Yang: Mr Speaker, Sir, at this juncture, it is rather difficult to give a final projected figure on the retrenchments likely to be experienced this year. But we know that it would be significantly less than the 29,000-odd workers who were retrenched last year. But it would probably be still a little bit more than the 10,000-11,000 that we experienced prior to the economic downturn in 1998.

Dr Lee Tsao Yuan (Nominated Member): I would like to ask the Minister three questions. (1) What is the current unemployment rate? (2) What is the net employment creation for the commerce sector? (3) What is the net employment creation for local workers as opposed to foreign workers?

Dr Lee Boon Yang: Sir, the unemployment rate at the end of March this year was 3.9%. As for the current unemployment rate, the preliminary figures indicated that it is on the decline. It is coming down. We expect the unemployment rate to continue to decline. The figures will only be available when we issue the quarterly economic survey probably later this month.

As to the details on the employment creation in the commerce sector, I am afraid I do not have the exact figures with me, but I would be prepared to share the information with the Nominated Member.

As to the net employment creation for local workers as opposed to foreign workers, the demand for foreign workers has actually been fairly stable as a result of the economic downturn. In fact, we saw a dip in demand. In other words, employment creation for foreign workers would have gone down. As a result of the recession, many companies, particularly those in the construction sector, had to release their foreign workers. Therefore, we would expect a decline in the employment creation for foreign workers. But due to the swiftness of the recovery, we are also expecting to see a resurgence in the demand for foreign workers and the demand for work permits would rise quite quickly as the manufacturing, commerce and transportation and communication sectors pick up in their business prospects.

Mr Simon S C Tay (Nominated Member): Sir, may I ask the Minister three points: (1) If one is given the figures year-on-year, as I understand it, how do the job numbers compare to the pre-crisis figures? Have we a net gain? (2) In the down swing, there were concerns about discrimination in job-hiring practices. What measures would the Minister take in the upswing to make sure that the jobs created are hired out fairly? (3) Is there a sense that the type of jobs we are getting are now different from the jobs we had in the pre-crisis days, as certain lower end jobs are gone for good and these people might face, in that sense, structural problems in seeking re-employment?

Dr Lee Boon Yang: In terms of job creation that we are seeing in the first half of this year compared to the past, in other words, prior to the economic downturn, I have to say that we are still a long way. Between 1992 and 1997, we were creating between 70,000 and 120,000 jobs a year. Last year, we had a net job loss. In the first half of this year, as has been mentioned earlier on, the total employment gain was only 5,800. So we are a long way from what it was before. Perhaps, this is an indicator to say that the economy has not completely recovered to what it used to be pre-1998.

As to the Member's question on discrimination, whether in the light of the economic downturn, there were any discriminatory practices adopted by employers vis-a-vis local workers versus foreign workers, I have replied to this point on a previous occasion in this Chamber that we have observed during the recession that, on average, when it comes to retrenchment, employers, in fact, retrench their workers without any discriminatory practices. In other words, the retrenchment reflects the profile of the workforce in the company. If the company has 50% local and 50% foreign workers in the manufacturing sector, then the retrenchment would take the same proportion. There was no evidence to show that there were clear attempts by employers to retrench Singaporeans and to substitute them with foreign workers.

On the type of jobs that would be created as the economy recovers, I think this is a very important point. As the economy recovers, we will shift into a new area of competition. Our neighbours will also recover, just as we are recovering, and they will be very much more competitive in some of the more labour-intensive type of businesses, particularly in manufacturing. So, as I have said in my main answer, companies will have to restructure their operations, move on to higher value added activities, bring in new technology and introduce new processes. In fact, as the economy recovers, the jobs that are going to be created will be quite different from the jobs that were available prior to the recession.

In fact, our workers will have to take note of this and make efforts to upgrade their skills so that they are able to take on the new jobs that are being created. If they do not upgrade their skills, they will find that when the economy recovers, jobs are going a-begging, but the unemployment rate may well stay high, mainly in the form of structural unemployment. This is a serious concern. That is why my Ministry, working together with all the other economic agencies, is putting in efforts to try to address this by providing more opportunities for skills upgrading and retraining to our workers, particularly the older workers and the less educated workers who are most vulnerable to structural unemployment.

Dr S. Vasoo (Tanjong Pagar): Can I ask the Minister whether the most affected workers are the older workers and what plans are there to enhance their employability?

Dr Lee Boon Yang: Sir, I agree with the Member that during the economic downturn of last year, the workers who were most affected by unemployment and most vulnerable to retrenchment, were indeed the older workers. Many of these older workers missed out on the opportunity for a good education and for skills training when they were younger. Now they are in their mid-40s and they become very vulnerable to retrenchment. In fact, if I recall correctly, they were over-represented among the groups of workers who were retrenched. That is why we have to have special programmes to meet their needs. In the way I responded to the Nominated Member, Mr Simon Tay, we have to put in extra efforts in this area to help the older less-skilled workers to upgrade their skills. The Skills Redevelopment Programme is one such programme focused at meeting the needs of the older workers, helping older, less skilled workers to upgrade, refresh their skills, so that they can take on the new jobs that are being created, in other words, helping them to avoid structural unemployment.

Mr Zulkifli bin Baharudin: Sir, the newspaper reports show that Malay workers are more prone to retrenchments and have greater difficulty in finding new jobs. Two questions: (1) Do the latest statistics from the Ministry confirm this? (2) How successful have retrenched Malay workers been looking for new jobs?

Dr Lee Boon Yang: Sir, during the economic downturn, nearly two-thirds of the retrenched workers came from the manufacturing sector. And the vast majority of those who were retrenched in the manufacturing sector were the production operators. Many Malay Singaporeans work in the production operation type of jobs in the manufacturing sector. Then, logically, you expect that you will see more Malay Singaporeans among those who were retrenched as a result of the economic downturn.

As to helping them to find re-employment, we have made every effort to help all Singaporeans who were retrenched as a result of the downturn. We have organised many job fairs with the support of the various Community Development Councils. The job fair was an attempt to bring employers who are still recruiting to the community, and very often at the community centre itself, and to bring people living in the vicinity of the community centre to come down if they need job assistance. We found the job fairs to be quite useful in helping unemployed Singaporeans look for jobs.

We also benefited from the support given to us by the various community self-help groups. For instance, MENDAKI and even AMP have actively participated in some of our employment exercises. Likewise, SINDA and CDAC have also participated in helping to act as surrogate employers for unemployed Singaporeans who need to go for further training before they can take on new jobs. So, in the Skills Redevelopment Programme, we, in fact, were able to work with the community self-help groups such as MENDAKI, SINDA and CDAC whereby the self-help groups will take on the role of employers for the unemployed Singaporeans and put them through the SRP programme, providing the financial support for them, so that they can undergo training to take on new jobs.