Overall employment dips, real incomes fall amidst high inflation in 2023

Although there has been a dip, Singapore’s overall employment rate remains the fourth highest when ranked against Organisation for Economic Co-operation and Development (OECD) countries.

This is according to the Ministry of Manpower (MOM) in its advance release of the Labour Force Report 2023 on 30 November 2023.

Singapore’s employment rate ranked ahead of countries like Switzerland, the United Kingdom, and the United States.

The employment rate for residents aged 15 and over declined to 66.2 per cent in 2023 from 2022’s historical high of 67.5 per cent amidst an exceptionally tight labour market, said MOM.

The ministry added: “Singapore’s labour market remained resilient despite the weak economic environment in 2023.”

The employment rate for seniors aged 65 and over also eased for the second consecutive year from 21 per cent in 2022 to 30.6 per cent in 2023, following a large increase from 2020 to 2021.

Compared to the pre-pandemic level in 2019, the figure in 2023 is still higher by three percentage points.

MOM said the decline was in the self-employed pool – mainly in Transportation and Storage, Wholesale Trade and Retail Trade.

“Business models have changed since the pandemic, for example, a shift from physical to online sales channels. This and the challenging business outlook may have led more older self-employed to retire,” said the ministry.

MOM added that Singapore has consistently maintained its high ranking in employment rate over the decade thanks to efforts by tripartite partners to raise the employability of older workers and promote women’s return to the workforce.

Real incomes fell amidst high inflation

Even though nominal income rose, real incomes fell for the 20^th percentile and median workers due to high inflation.

After accounting for inflation, real income in 2023 for the 20^th percentile worker fell 3 per cent on a year-on-year basis.

However, the fall was reduced to 2.1 per cent after accounting for the Workfare Income Supplement and related payments.

Real income growth will likely remain negative for the remainder of 2023, but MOM expects an improvement in real income growth in 2024 with easing inflation.

MOM said that over the decade, real income growth remained positive and wage dispersion between the 20^th percentile and median workers has narrowed as the incomes of the former rose faster than the latter.

“Government transfers, such as the Workfare Income Supplement and the Assurance Package, will help individuals and households cope with higher costs due to inflation,” added MOM.

Continued decline in self-employed workers

The proportion of self-employed residents declined to a new low of 12.2 per cent in 2023 from 13.3 per cent in 2022.

This decline was driven by the drop in the share of employers (from 4.1 per cent to 3.1 per cent) and own account workers (from 9.0 per cent to 8.7 per cent).

Own account workers refer to workers who work on their own accounts with a partner or more, and do not employ workers on a continuous basis.

There was also an increase in the share of employees, a continuation of the trend since the economic recovery (from 85.3 per cent in 2020 to 87.8 per cent in 2023).

MOM said this increase could be due to the higher number of job openings and workers’ preference for employee jobs, which offers more job stability amid greater economic uncertainties.