Minister Lim Hng Kiang's oral reply to Parliament Questions on Employment Forecast and Growth Sectors

Question No. 913 in Notice Paper No. 7 of 2009 

Name and Constituency of Member of Parliament
Mdm Halimah Yacob, Member for Jurong GRC

Question
To ask the Minister for Trade and Industry (a) what is the employment forecast for 2009; (b) which are the growth sectors; and (c) which sectors will be worst affected by the global economic crisis.

Answer
Mr Speaker Sir, the global economic environment has deteriorated significantly since the middle of last year. The Singapore economy has entered a recession. We have already seen three consecutive quarters of negative quarter-on-quarter GDP growth, and two consecutive quarters of negative year-on-year GDP growth.

The economic downturn has spread to all the key sectors of the economy. The sectors that have been hardest hit by the crisis are those most exposed to the external economic environment, such as manufacturing, tourism, transport and wholesale trade; as well as sentiment-sensitive sectors such as financial services.

Overall, non-oil domestic exports fell by 7.9 per cent last year. The fall was especially steep in the last few months of 2008. There have been steep declines in the exports of electronics, pharmaceuticals, and petrochemical products, while container throughput and sea cargo handled in December contracted by 13 per cent and 18 per cent respectively.

This contraction in exports is being experienced by many other regional economies too. For instance, exports from Taiwan and South Korea declined by 40 per cent and 17 per cent respectively in December, while Malaysia saw a 5 per cent decline in its exports in November.

The outlook for 2009 is for a difficult year. Consumer demand in our key export markets, such as the US and Europe, will remain weak. Our manufacturing sector is therefore likely to continue facing a slowdown this year. Regional trade will also slow down further, which will drag down the sectors relating to transport and wholesale trade.

The financial services sector will also experience a sharp slowdown because of the impact of the financial crisis. Although our banks have largely escaped the direct impact of the crisis because of their low levels of exposure to distressed assets, the crisis has hit the sentiment-driven segments of the financial sector which include the trading of stocks, shares and bonds, foreign exchange trading, as well as fund management activities.

The domestically-oriented sectors of our economy will also experience moderation in growth. Weaker consumer sentiments among Singaporeans have affected the retail sector and the property market. Retailers and restaurants are seeing slower business as consumers are reining in discretionary spending. Private home prices fell for a second consecutive quarter at the end of 2008 according to advance estimates from the URA, hurt by a drop in investor sentiments amid the growing global economic downturn.

However, there are some sectors which are still showing positive growth. The construction sector and supporting activities such as architectural and engineering services have benefitted from a strong pipeline of projects that were awarded in the past two years. The information and communications sector has also been resilient, as it is supported by major public sector IT initiatives and growth in international call volumes. The healthcare and education sectors are also showing steady growth. However, these sectors collectively make up slightly less than 10 per cent of our economy, and their growth will not be able to compensate for the declines in the other sectors. Another area for optimism is our strong investment pipeline.

Madam Halimah has asked about the employment outlook for 2009. The strong employment growth which we have enjoyed in recent years will ease significantly. Unemployment and retrenchments will rise. The labor market has already softened in the second half of 2008. We expect employment growth to further weaken and job losses to increase, in tandem with the economic slowdown.

However, new jobs will still be generated from the growth sectors. For example, the construction sector is likely to continue hiring this year. In addition, the healthcare sector will continue to grow over the next two years with the development of healthcare facilities such as the opening of the new Khoo Teck Puat Hospital. The civil service will also continue hiring: The Ministry of Education recently announced that it will be recruiting more than 7,000 teachers and support staff in 2009, while the Ministry of Home Affairs is looking to fill more than 1,000 vacancies across the various Home Team departments. In the tourism sector, the integrated resorts have already started their hiring efforts and are expected to provide more than 20,000 job opportunities over the next few years. EDB estimates that with the new investments coming on-stream this year, this will generate about 6,000 new jobs.

In closing, let me assure Madam Halimah that we are closely monitoring the economy to identify the sectors vulnerable to retrenchments. In collaboration with our tripartite partners, the government has already implemented the $600mn SPUR programme to help our workers retrain and upgrade their skills, so as to remain employable and employed during and beyond the economic downturn.