What Are The Causes Of The Rise In Unemployment In Singapore Over The Past Six Quarters?

Singapore has been experiencing rising unemployment since the first quarter of 2016. For people who have not studied economics or taken economics tuition, they may not be able to figure out the reason. As an economics tutor, I have also liked to impart economic knowledge to people, not only in economics tuition classes, but also in articles, which is what I am doing now. The rise in unemployment in Singapore since the first quarter of 2016 can be attributed to a rise in cyclical unemployment, structural unemployment and possibly frictional unemployment.

Cyclical Unemployment

Cyclical unemployment typically rises when the total demand for domestic goods and services decreases or increases slowly relative to the supply of labour in the economy. Sometimes, it occurs due to a decrease in total supply of goods and services in the economy due to a sharp rise in the cost of production in the economy which usually occur due to a sharp rise in oil prices. The theory of unemployment is taught by the economics tutor in economics tuition at every economics tuition centre in Singapore. In Singapore, cyclical unemployment has increased since the first quarter of 2016 due to the total demand for domestic goods and services increases slowly relative to the supply of labour in the economy. When the total demand for domestic goods and services increases slowly relative to the supply of labour in the economy, the new jobs created will not be sufficient to cater for the new entrants in the labour force and this will lead to cyclical unemployment. Singapore is a small economy that is highly dependent on exports. However, exports in Singapore have been rising at a slow rate over the last few quarters due to several factors. China, the United States and the European Union are largest export markets of Singapore. However, although China has been growing, it has been decelerating. This is largely due to the unsustainability of the export-driven and investment-driven economic growth strategy. Most of the economies in the European Union have come to a standstill and although some of the economies in the European Union are growing, the pace of growth is slow. This is largely due to the less aggressive use of fiscal poly and monetary policy in the aftermath of the 2008-2009 Global Financial Crisis. The United States has largely returned to normal from the 2008-2009 Global Financial Crisis. However, the economic growth is near the lower end of the normal rate of between 2 and 3 per cent. The United States grew by only 2.1 per cent in the previous quarter. This is largely due to the weak state of the world economy.

Structural Unemployment

Structural unemployment rises when the pace of technological advancement increases. One can learn the theory of unemployment from any economics tutor who provides economics tuition at ‘A’ level. In Singapore, the rise in the pace of technological advancement over the last few years is due to the restructuring of the economy from one which is labour-driven to one which is productivity-driven. This is due to the unsustainability of the labour-driven economic growth strategy which will lead to rising population in Singapore with a limited land area. In an attempt to increase the efficiency of capital and therefore the labour productivity in the economy in order to drive economic growth, the Singapore government has engaged in research and development directly and indirectly. Research and development will lead to technological advancement which will increase the efficiency of labour in the economy. However, technological unemployment will cause low skills to become obsolete which will lead to an increase in structural unemployment.

Examination Question

The topic of unemployment is likely to be tested in the Singapore-Cambridge GCE ‘A’ Level Economics examination soon as it has not been tested over the last 10 years. Therefore, if you have doubts about the causes of the rise in unemployment in Singapore recently, it is important that you consult a good economics tutor who specializes in ‘A’ level economics tuition.

Benjamin Tay

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