SINGAPORE, Sept 15 — Total employment has recovered to pre-Covid-19 levels mostly due to the increase in foreign labour as border controls eased, but those in the manufacturing and construction industry, the largest beneficiaries of the foreign labour boost, said that the increase in numbers is only half the battle won.

The lack of relevant skills in many of the new hires, who were brought in to replace more experienced workers who had left during the pandemic, has slowed down work, some manufacturing and construction firms said.

One employer said that for the construction industry, there needs to be an even greater inflow of foreign workers compared to before the pandemic, because projects have piled up during in the past two years, and that merely matching the pre-pandemic number may not be enough.

The Ministry of Manpower (MoM) stated in its quarterly labour market report yesterday (September 14) that total employment had reached 99.5 per cent of pre-pandemic levels.

In the first half of this year, total employment — which excludes foreign domestic workers — had expanded by 108,500.

The increase was mainly contributed by non-residents — with 95,400 hires — particularly in the construction and manufacturing sectors, as "employers backfilled positions following the significant relaxation of border controls in April 2022”, MoM said.

Kenneth Loo, executive director of construction firm Straits Construction, told TODAY that the total number of foreign work permit holders working in his firm has reached close to pre-pandemic levels, compared to a 30 to 40 per cent shortage back in September last year.

However, he said "the problem is still that productivity is on the low side”.

"The number of skilled workers is still low, as we lost some skilled workers that went back home, and the new workers need time to be trained to (meet) expectations, so productivity levels are not back to pre-Covid levels yet.”

For instance, Loo said that for finishing works such as plastering and tiling, a worker may need months or even years of experience to carry these out proficiently.

"If what you do is not up to standards, you’ll have to rectify (the instalment) until you achieve the required standards,” he added. "If you employ a guy who is skilled, they’ll do it right the first time.”

Some employers in the construction sector, however, said that they are still facing a stark shortage of foreign workers.

Lei Lei, general manager of construction firm Sunbeam M&E, said that her firm is still about 30 to 40 per cent short on foreign manpower.

She had shortlisted workers from source countries such as Bangladesh and India who were interested in working in her company, but she could not get them work permits because the workers were not able to secure accommodations at dormitories here.

"All the current dorms are full-house, with waiting lists of up to 300 people,” she said. She claimed that this could be partly due to improved dormitory standards that were implemented to reduce the risk of transmission of infectious diseases, such as capacity limits on room occupancies.

Agreeing, Loo said that another reason for dormitories being oversubscribed is due to the need for even more workers now, owing to the severe backlog of work.

"Many unfinished works are still in progress, so we may need more workers than we did pre-Covid,” he said.

For those in the manufacturing sector, they face a similar pressure of upskilling their new workers.

Ken Lin, managing director of Kawarin Enterprise, a steel servicing and processing company, said that the firm was about 50 per cent short of foreign labour in the first quarter of this year and they are now about 20 to 30 per cent short.

While this has eased some of his woes, he finds that some of his newer workers are unfamiliar with specific skills such as operating various machines used to process steel.

Another specific challenge is in hiring workers from China, who made up about 50 to 60 per cent of Lin’s workforce before the pandemic.

At the moment, he has reduced the new hires from China to about 30 to 40 per cent because these workers generally prefer to work in their home country, which is still adopting a zero-Covid policy.

"It continues to affect us in manufacturing because it is challenging to hire the Chinese,” he added. "Even if we can hire them, the cost is 16 to 20 per cent higher than before.”

The higher cost is due to the higher demand for this shrinking pool of Chinese workers, he explained.

As for whether less experienced workers could account for more workplace accidents, Lei said that for new workers, "sufficient induction and training will be given”, and that on-site safety supervision is typically enhanced for such workers.

"To train someone to be cautious of risky activity is much easier than training someone to do things skilfully,” she said.

F&B sector still short of labour

In MoM’s report yesterday, it stated that the consumer-facing and tourism-related sectors — such as the food-and-beverage (F&B) sector — had also "begun to see a pick-up in non-resident employment”.

Speaking to TODAY, the owners of three F&B businesses said that they have seen an increase in foreign employees in the last few months, but added that the labour market is still too tight.

A major problem facing these employers is that many workers who left the F&B industry during the pandemic had decided not to return.

This was the case for Saladstop’s chief executive officer Adrien Desbaillets, who said that he would have liked to hire more employees to replace those who had left, but this was difficult at first due to the huge shortage of manpower as Singapore reopened its economy and moved towards pre-pandemic levels of activity.

In the last three months, though, there was a slight reprieve when he managed to recruit 10 foreigners and saw a 15 per cent increase in manpower from the previous quarter.

With more hires, these employers are having to spend more due to the higher cost of labour compared to before the pandemic.

Anna Lim, founder of The Soup Spoon chain, said that due to the high cost of living such as increased rental costs, foreign employees are now being paid higher salaries than before the pandemic, which adds to her cost of operation.

She understands the needs of these foreign workers and is willing to bear some of the extra costs, because she "wanted to be ready” for when the wage increases under the progressive wage model for F&B and retail workers take effect.

Lim said that she hired three to four foreign employees for her chain and a total of 10 employees in the last three months.

However, she mentioned another bugbear that some of the employers shared — that they are limited by the foreign worker quota for the services sector, which is pegged at a ceiling of 35 per cent of the total number of employees.

"We definitely are trying to hire more locals (before) we can hit the foreign quota (and) have a more balanced workforce,” she said.

Tight labour market ‘not a bad thing’

Economists who spoke to TODAY said that looking ahead, the tight labour market is not necessarily a bad thing because it indicates that demand and purchasing power are strong.

Senior economist Irvin Seah from DBS bank said that a slack labour market is an indication that economic activity is slowing down. "Too much slack” in the labour market could lead to a pick-up in unemployment rates.

However, Seah also said that such a slowdown and even an upcoming recession are to be expected because of global headwinds such as the Russia-Ukraine war and rising interest rates.

"Labour market conditions will remain tight at least to the end of the year, but heading into next year, expect the slack to be more pronounced,” he added.

Economist Song Seng Wun from CIMB bank said it is imperative that the labour market does not tighten too much, because it could result in cost pressures rising exponentially as labour becomes even more expensive.

At a certain point, this increased cost may outstrip people’s purchasing power, resulting in a plunge in demand as people tighten their belts, possibly leading to a recession.

"While we are looking to hire because of demand for a service, that demand might disappear because of inflation and higher cost of living,” Song said.

Selena Ling, head of treasury research and strategy at OCBC bank, said that as the labour market remains tight, it is natural that firms rush to take in foreign labour.

"It’s quite obvious that the local workforce is effectively in full employment already... there’s not that much that you can squeeze out (and) we have probably reached the limit,” she added.

"Without the supplement from the foreigners and non-residents, you are not going to get that additional boost.” ― TODAY