Unemployment woes
Some 30 % jobless caused by structural downsizing; so serious that foreign workers now leaving for China.
Dec 30, 2002

An estimated 30 per cent of Singapore's unemployment is structural, stemming from the progressive downsizing of the electronics sector and consolidation of some service industries, according to an investment bank.

"Singapore's structural unemployment could potentially become serious in our view," warns UBS Warburg, according to Far East Economic Review.

The problem is due in part to a mismatch between available job skills and requirements.

Over the last five years, the proportion of unemployed persons aged above 40 and with secondary education or less has risen sharply, FEER said. In addition, current education levels won't help as Singapore moves to a more knowledge-based economy.

In 1998, for example, close to 15 out of 100 workers had a university education in Singapore, the report found.

That was lower than in the United States, South Korea and Japan.

Correspondingly, the share of workers with less than secondary education was higher than in Hong Kong, Japan and the US.

But there's some good news: Between 1991 and 2001, the proportion of workers with secondary education or less dropped from 77 percent to 62 percent, while the proportion of degree holders more than doubled to 17 percent, The Review reported.

Foreign workers leave

Meanwhile the city state's worst downturn in four decades has taken a toll on foreigners working in the city-state, with a record number leaving the island as companies cut headcount and generous expatriate packages evaporate, Reuters reported.

"People are leaving and they are leaving in very big numbers," said Bill Cain, managing director of Santa Fe Relocation Services, according to its correspondent Amy Tan.

The firm with US and European clients moved 800 families into Singapore in the 11 months to November. That compared with 1,400 for all of last year.

As of November, his group had moved 1200 out of the city-state, nearly neck-and-neck with 1300 last year.

"The older expats with the big allowances are leaving," said Cain. "There is a trend towards younger (workers) and singles, primarily Australians, who are coming up on cheaper packages."

According to recent state data quoted by Reuters, the number of foreigners living in Singapore for at least a year fell 3.4 percent to 785,400 between June 2001 and this year.

The exodus was the largest for the past 10 years.

The figures include both expatriates and low skilled foreign workers such as maids or construction workers, but state data did not provide a breakdown of the types of workers leaving.

The number of foreigners in Singapore has steadily increased over the past decade thanks to an open-door policy towards skilled foreign labour. The year 1999 was the only exception when 18,200 foreigners left after the Asian financial crisis.

Moving within Asia

The city state, which struggled out of its worst recession in four decades in the second quarter, is home to numerous multinational companies.

The Japanese are the biggest expatriate community in Singapore with more than 20,000 people based in the tiny state of 4.1 million. There are about 16,000 Americans in Singapore, Reuters said.

"Banks and other companies across the board are cutting down. They are trying to cut costs and expatriate names glow if they are on a full package," said Jacqueline Palloway, director of No Stone Unturned, which offers specialised services to the expatriate community.

"Companies are just not giving out the same packages as they were two years ago. They are capping allowances," said Cain.

But those made redundant in Singapore were not necessarily moving home to the United States or Europe.

"A lot of business is inter-Asia. A good majority is just re-shifting and aligning," Cain said.

He said between 10 to 20 percent of the expatriates were leaving Singapore for China.

The exit of the expatriates with large housing allowances is adding to the misery of local property owners who have endured four straight years of falling housing prices.

"The expat story has been an issue. With firms downsizing, you have people leaving and this has put pressure on the rental market which is already in the doldrums," said an economist who did not want to be identified.

But some expect the expatriates to return eventually.

"I'm sure they will return but it will probably take a while because it's not just Singapore that foreign investors will look at, it's the region as a whole," said the economist.

"Singapore will suffer from the fact that its located within Southeast Asia where there are increased security concerns related to Indonesia and the Philippines," he told Reuters.
Dec 30, 2002