CHINA and India may create more jobs because of their large population pool, but on a per 100,000 residents basis, Singapore beats all countries hands down.
According to a study by IBM Consulting Services, Singapore created 598 jobs per 100,000 last year, making it the top-ranked country in terms of job creation productivity, far ahead of even the second-placed Czech Republic, which had 389 new jobs per 100,000 residents last year.
"Logically, large markets attract more businesses either because they have a larger consumer market or because they are a growth market," said Roel Spee, worldwide leader for IBM Global Business Services' global location strategies practice. "So to compare apples with apples, there's a variety of things we can do. One is to look at the size of the economies, for example, expressed in the size of the population."
The findings were culled from IBM's unique database that registers investment projects based on public announcements around the world. It compiles a number of indicators related to investment projects, including the nature of the industry, the source and target of investment, as well as the estimated number of jobs that would be created.
Collated by IBM's global location strategies practice, the analysis this year focused on employment and the type of industry those jobs are in. Mr Spee explained that his team felt job creation would have a bigger impact than the value of the capital investment. This is because a capital investment could involve importing of equipment or contracting of services from other countries.
"So that flow of money, that capital investment will not only go to the specific location where the facility is being built," he said. "It may go in many different directions, whereas the jobs are, very often, created around the very neighbourhood of that facility in the local labour market. So we feel that job creation is a much better indication of the regional impact of the investment than capital."
Trailing behind Czech Republic was Ireland, which created 273 jobs per 100,000 residents. The rest of the list was dominated by emerging economies like Slovakia (5th place), Malaysia (7th), Vietnam (12th) and Portugal(18th). Apart from Singapore, the other developed countries that made it to the list were Belgium (15th), Israel (16th) and the UK (19th).
Singapore was also most successful in job creation in the electronics, ICT, and R&D sectors. On a per 100,000 basis, it created 217 jobs in electronics, ahead of Czech Republic (129 jobs) and Malaysia (116). In ICT, it pips Ireland (72 jobs) and Israel (56), with 168 jobs per 100,000, and created 51 jobs per 100,000 in R&D, against Israel's 35 and Ireland's 32.
The fact that countries like Singapore, Ireland and the UK still make it to the top job creator rankings show that there is still scope for mature economies even as manufacturing operations are shifting to China and India in droves. After all, many investment decisions are not based on costs alone, he said.
"Singapore may be high on the labour costs side, or, at least higher than other locations in the neighbourhood," said Mr Spee. "But on the tax side, it's one of the most attractive countries around the world, from corporate tax point of view. And it means that for industries that generally create very high profit margins, that is a huge advantage which overrules the labour costs advantage that other countries may have."
On an absolute basis, India created the most number of jobs last year, at 305,000. China came in second, with about 175,000 new jobs. They were followed by the US and Vietnam, with 112,000 and 103,000 jobs created respectively.
Despite the emergence of the US sub-prime crisis this year and the rising property prices in Singapore, Mr Spee doesn't think the two trends will have an impact on the data for 2007. For one, a development such as the sub-prime crisis will take a few years before its impact is felt, and property prices, while important, is not a key cost component, compared with labour costs.
He also noted that investors now have a wider choice than before, as more and more emerging markets are making their way to their radar screens as choice locations - including Vietnam, Bolivia and Pakistan.
"In the last five years, companies are beginning to recognise that there are many more countries that offer, not just a low cost base, but really acceptable business conditions," he said. "And those business conditions are quite quickly improving in emerging markets."
The IBM study excludes non-contestable investment projects such as mergers and acquisitions. The job creation was input at the point when the investment decision was announced. It does not track the actual jobs created when projects are fully realised.
According to data from Singapore's Ministry of Manpower, there was a record 173,300 new jobs created last year.
