By Chuang Peck Ming

(SINGAPORE) There is a big churn in the job market. Even as record numbers of jobs are being created, more people are being retrenched and more are seeking jobs. At the same time, the number of vacancies is shooting up. But while most layoffs are in manufacturing, most vacancies are in the services sector. The market appears to be searching for equilibrium.

Retrenchment jumped in the January-March quarter to cross 2,000 for the first time in over a year, the latest job figures released yesterday by the Ministry of Manpower (MOM) showed. Some 2,274 people were axed in the first quarter of this year, up from 1,966 in Q4 2007.

With even more job seekers knocking on employers' doors amid more job openings, the unemployment rate edged up to a seasonally adjusted 2 per cent in March, from 1.7 per cent in December 2007.

At the same time, a still tight labour market pushed nominal earnings in Q1 up 11 per cent over the year - much higher than the 4.3 per cent in the preceding quarter and 5 per cent in Q1 2007.

But after adjusting for inflation (the consumer price index rose 6.6 per cent in Q1), earnings were up 3.6 per cent in real terms - lower than the 5 per cent real increase in Q1 2007.

Still, with labour productivity down 2.8 per cent over the year, following a 3.7 per cent fall in the preceding quarter, the overall unit labour cost increased for the eighth straight quarter in the first quarter - rising 8.8 per cent, after a 6 per cent jump in Q4 2007.

Three in four of those laid off in Q1 were manufacturing workers.

Services accounted for almost a quarter of workers axed in Q1, led by wholesale trade and financial houses. Over two-thirds of the workers affected were in their 30s and 40s.

The annual retrenchment figure rose from 10,294 in 2005 to 12,606 in 2006, before dropping significantly to 7,675 last year.

The number of layoffs declined in the first three quarters of 2007 but began to climb in Q4, when the number of workers axed increased to 1,966, from 1,827 in Q3.

Total employment in Q1 this year expanded a record 73,200, against 62,500 in Q4 2007 and 49,400 in Q1 2007.

Preliminary figures released in end-April put the job gains at 68,400. 'Services led (jobs growth in Q1) with employment gains of 46,500,' MOM said in a statement.

Driven by growth in building activity, construction added 14,500 workers, continuing the rapid increase of the earlier quarters. Manufacturing posted a gain of 11,800.

'Employment continued to expand strongly in a healthy economy, although an uncertain outlook and more cautious sentiment resulted in a higher unemployment rate,' MOM said.

Job vacancies jumped from 37,400 in December last year to 38,200 in March this year, with 71 per cent of the openings in the services sector - mainly community, social and personal services, wholesale & retail trade, professional services, and transport and storage.

But with the rise in job seekers, MOM said the seasonally adjusted ratio of job openings to jobless people dropped from 134 per 100 last December to 115 per 100 in March.

This article was first published in The Business Times on Jun 17, 2008