Chemicals: Not so rosy now

The Labour Movement says many lost their jobs last year, with many more expected this year. The Economic Development Board's (EDB) outlook for the sector in 2014 is also weak

 Jurong Island at night; picture courtesy: JTC

Jurong Island at night; picture courtesy: JTC

Jobs

The National Trade Union Congress (NTUC), in it's outlook for 2014 for the unionised sector in January, revealed that 2,898 workers in the sector lost their jobs in 2013, as compared to 1,647 the year before. This is a 76% increase year-on-year. While the break-down for the chemical sector was not given, NTUC informed that, of these, almost 91% lay-offs were in the manufacturing sub-sectors of electronics, chemical and precision industries. Moreover, among the retrenched workers, two-thirds were the low-income bracket production and manual workers, and technicians.

Explaining the reasons for the lay-offs, NTUC said, “Reasons for the lay-offs include relocation of operations out of Singapore, or shut down of production facilities. Four in 10 workers lost their jobs due to on-going company restructuring and shifting of production to countries such as Malaysia, China and Vietnam.”

The future for these sectors is also not so rosy with NTUC cautioning that “the first quarter of 2014 may see retrenchment affecting about 200 workers”. 

Investment

Additionally, EDB in it's year-end review for 2013, noted that Fixed Asset Investments (FAI) in the chemicals sector declined to S$2.5 billion last year from S$6.7 billion in 2012. The overall share of the sector in yearly FAI also fell to 20.7% from 41.7% in the same time period. FAI refers to capital investment in facilities, equipment and machinery.

Similarly, Total Business Expenditure (TBE), which refers to a company’s incremental operating expenditure in Singapore (excluding depreciation) including wages and rental, for the chemicals sector declined to S$0.3 billion (4.2% of the total TBE investment commitments in Singapore) last year as compared to S$0.8 billion (13.5%) in 2012.

Finally, the sector also saw a decline in 2013 in Value Added (VA). VA measures the sector's direct contribution to Singapore’s Gross Domestic Product (GDP) excluding multiplier effects including wages and profit. In 2012, VA for the chemicals sector was S$1.7 billion (or 8.2% of the total VA generated in Singapore), while it was S$1 billion (6.2%) last year. 

Future

Furthermore, in it's forecast about the business expectations of the manufacturing sector for the first-half of 2014, EDB projected lower output in the first quarter of 2014 compared to a quarter ago for the chemicals sector. “Output in the chemical cluster is mainly weighed down by lower petroleum throughput, on account of weak refining margins and scheduled plant maintenance shut-downs,” the agency concluded.