SINGAPORE — The total number of people employed here, excluding foreign domestic workers, grew by 64,400 in the second quarter of this year, early estimates from the Ministry of Manpower (MOM) showed, to hit its highest level in 14 years.

The spike in growth was largely driven by non-resident employment, mainly in construction and manufacturing, MOM said on Friday (July 29), adding that these are sectors that traditionally have a lower share of residents.

Minister for Manpower Tan See Leng noted that there are "many traditional sectors in which the resident workforce cannot fit in adequately”, and that employment growth in these sectors was what drove the increase in non-resident employment in the second quarter.

Business owners in sectors such as hospitality or food and beverage have said that they are experiencing a higher surge in demand than what MOM had estimated, and so they are looking to ramp up their hiring, he said.

"A lot of SME (small and medium-sized enterprises) and business owners...have constantly (given) feedback to me that our projections were less optimistic than their own real-life experience,” he said.

Dr Tan was speaking to media on the release of his ministry’s advance labour market report for the second quarter of this year, after visiting the office of event management company Aux Media Group on Friday morning.

He also said that unemployment rates remained at pre-Covid levels and the number of retrenchments has fallen to record low levels.

The last time Singapore saw a record high in total employment was in the second quarter of 2008, the year the Global Financial Crisis ended. The figures for total employment — excluding foreign domestic workers — then was 69,600.

Employment

The total number of people employed here, excluding foreign domestic workers, during the second quarter of this year expanded by 64,400, or 1.9 per cent, outpacing the previous quarter’s 1.2 per cent growth, said MOM.

The ministry said resident employment continued to increase at a "steady pace”, with the bulk of it concentrated in growth sectors such as information and communications, professional services and financial services.

This, said MOM, suggests that job growth among residents has been for higher-skilled jobs.

As for non-resident employment, the ministry said it "increased more robustly” compared with the previous quarter, mainly in areas related to construction and manufacturing.

MOM said that with the significant relaxation of border controls since April this year, employers in such sectors have been hiring to backfill positions and meet rising demand.

Unemployment

Unemployment rates, said MOM, have been trending down since peaking in October 2020, and have remained largely unchanged after reaching pre-Covid levels in February this year.

In June, unemployment rates were 2.1 per cent overall, 2.9 per cent for residents, and 3.1 per cent for citizens.

Over the quarter, the ministry said the number of unemployed residents fell from 73,900 in March this year to 71,100 in June.

Retrenchment

Citing its latest survey returns, MOM said the number of retrenchments in the second quarter of this year is expected to decline further to 1,000 — or about 0.5 per 1,000 employees.

Dr Tan said this is "well below the pre-pandemic level”.

MOM said in its report that over the quarter, retrenchments mainly declined in the manufacturing sector.

"As with recent quarters, business reorganisation or restructuring remained the top reason for layoffs,” said MOM.

In any case, Dr Tan said among retrenched residents, more than seven in 10 were able to re-enter employment within six months after retrenchment, which is a high that was last seen in 2015.

Outlook

MOM’s report said that it expects non-resident employment to continue growing at a robust pace as it catches up to its pre-Covid levels. This is based on its latest estimates, which remain below 2019 levels by about 10 per cent.

However, resident employment, which is expected to be about 4 per cent above 2019 levels, will likely see subdued growth given the low resident unemployment rate, it said.

Selena Ling, the chief economist and the head of treasury research and strategy at OCBC Bank, told TODAY that the 10 per cent gap between non-resident employment today versus 2019 are in sectors that are more reliant on foreign workers such as construction and hospitality, and which are seeing rapid post-pandemic growth.

"The construction sector is playing catch up for many delayed projects, while international travel is returning, (and) so many services firms are also stepping up staffing to meet greater consumer demand,” said Ms Ling.

"I believe policymakers are already ramping up to meet the increased demand for non-resident workers, but there may be a bit of time lag.”

On why the pace of employment growth for residents was more subdued in the second quarter, she said this category of workers has already benefited from the increased hiring in the previous few quarters and employment among residents is already back to pre-Covid levels.

"The resident wage growth has been very strong in the first quarter, and the resident labour supply is already very tight,” she added.

Citing May figures from the Ministry of Trade and Industry, Dr Tan said the gross domestic product growth forecast for this year is at 3 per cent to 5 per cent, with growth likely to come in at the lower half of the forecast range.

"Barring any unexpected shocks, the labour market recovery is likely to continue in the second half of this year. However, the uncertainties in the global economy may weigh on the pace of our recovery,” he said.

For example, he said demand may be dampened by global headwinds such as strong inflationary pressures, the ongoing Ukraine-Russia conflict, and a resurgence of the Covid-19 pandemic in major economies such as China.

Nevertheless, Dr Tan said he expects the tightness in the labour market to ease in the coming months to ease as non-resident employment numbers continue to recover.

Still, he said it is "essential for businesses to press on with transformation through diversifying their non-resident workforce, (and) strengthening their Singapore core”.

They can also do so by offering flexible work arrangements "to tap on other workforce segments” such as older workers as well as caregivers, he said. — TODAY