Asia’s job markets are holding up even as the European crisis hurts exports, auguring stability in domestic demand that reduces the case for the region’s central banks to add monetary stimulus.
Two-thirds of Asian employers surveyed by Hays PLC, the UK’s biggest recruitment firm, said they plan to raise salaries by at least 3 percent this year, while 54 percent anticipate giving bonuses to more than half of their workers.
Singapore’s unemployment rate fell to a 14-year low of 2 percent last year, Hong Kong’s January rate matched levels not seen since 1998, while South Korea’s is near the lowest since early 2008.
Even in Japan, which last year suffered its third economic contraction in four years, the jobless rate in January dropped to 4.6 percent from 4.9 percent a year before, a government report showed yesterday.
In Taiwan, the number of workers on unpaid leave has dropped by more than 40 percent since the start of the year, and the jobless rate in January was the lowest since 2008, according to government data.
Malaysia’s unemployment rate fell to 3 percent in the fourth quarter of last year, near the lowest since 1999, from 3.1 percent in the July-to-September period.
“We have tight labor markets across Asia,” said Frederic Neumann, Hong Kong-based cohead of Asian economic research at HSBC Holdings PLC. “Rather than sit back and let inflation rise again, policymakers will want to be proactive and tighten the screws before it becomes a problem. We could even see rate hikes coming through at the end of the year.”
Financial companies are adding to payrolls in Asia even as they cut back elsewhere, underscoring the region’s lure. HSBC, which aims to cut 30,000 jobs worldwide, may expand its Asia-Pacific headcount as much as 5 percent by the end of next year, the bank said last month. Standard Chartered PLC, the UK lender that earns most of its profit in Asia, plans to hire as many as 2,600 employees after posting its eighth annual record earnings.
Asian companies endured supply shocks in the past year, including Japan’s earthquake and tsunami and Thailand’s floods, to keep churning out components for Apple Inc and Toyota Motor Corp. The region exported US$4.69 trillion of goods in 2010, accounting for about a third of the global shipments, according to the WTO.
“Companies dusted off their copy books from 2008 and implemented crisis-response measures to stay afloat,” said Leong Wai Ho (梁偉豪), a senior regional economist at Barclays Capital in Singapore. “They understood this was going to be temporary and that it made sense to hang on to their labor force. Companies responded by trimming down their inventory holdings and by and large, there were no significant job losses.”
Central banks in nations from Indonesia to Thailand lowered interest rates last year to guard against the impact of Europe’s crisis. The Philippines on Thursday lowered its benchmark rate for a second straight meeting.
South Korea and Malaysia are forecast to hold off on interest-rate cuts next week as a jump in oil prices adds to inflation risks.
With a limited slack in job markets and energy prices escalating, some monetary policy makers may need to shift gears later this year should threats to the global expansion continue to diminish.
The Reserve Bank of Australia has already opted to hold off on adding stimulus, unexpectedly forgoing last month the rate cut that a majority of economists surveyed by Bloomberg had anticipated.