Expect lower wage growth in 2016: MAS

Expect lower wage growth in 2016: MAS
Wage growth will likely moderate and jobless numbers are expected to rise this year, the Monetary Authority of Singapore said in its biannual macroeconomic review on Wednesday.

Posted 27 Apr 2016 13:11

SINGAPORE: Wage growth will likely moderate in 2016 amid tepid employment demand and reduced tightness in Singapore’s labour market, the Monetary Authority of Singapore (MAS) said in its biannual macroeconomic review on Wednesday (Apr 27).

“With lower labour demand and supply, total job creation this year is expected to stay modest. As such, overall and resident unemployment rates are likely to rise slightly in 2016 alongside the weak cyclical conditions, intensifying industry reconfigurations in some sectors, as well as increasing skills mismatches within the resident workforce,” the MAS said, adding that redundancies could continue to rise in sectors buffeted by weak external demand and restructuring efforts.

As such, the overall resident wage growth is forecast to “moderate to about 2.5 to 3.0 per cent, from 3.5 per cent in 2015”.

However, salary increments will vary according to sectors.

In industries such as the community, social and personal (CSP) services sector where vacancy rates are higher, employees are likely to see higher increments, while those in sectors with greater slack, such as manufacturing, may see weaker wage increments.

“Both labour demand and supply in the economy are settling at permanently lower levels, in line with the moderation in Singapore’s trend gross domestic product (GDP) growth and ageing population,” the MAS report said.

The central bank added: “Alongside the fall in labour demand, there has been a reduction in foreign labour supply growth amid the tightening of foreign worker policies. Meanwhile, the supply of resident workers grew at a fairly stable pace, despite an increase in the entry of part-time workers into the workforce. Going forward, structural headwinds and demographic ageing could intensify and further moderate the trend component of employment growth.”

In the near term, labour demand will continue to hinge heavily on cyclical conditions and is expected to remain subdued, the MAS said.

Latest results from the ManpowerGroup employment outlook survey showed the proportion of employers expecting to expand headcount falling to 10 per cent in the second quarter of 2016, from 14 per cent a year earlier.

- CNA/sk


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