Foreign workers may not return to Singapore in same numbers as before, say economists

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A report released by the Ministry of Manpower last week showed that while Singapore saw the sharpest fall in total employment in more than 20 years, foreigners bore the brunt of the layoffs.
People walk during their lunch break in the financial business district of Raffles Place in Singapore on Jan 11, 2021. (Photo: AFP/Roslan RAHMAN)

SINGAPORE: It could take longer for skilled foreign workers to return to Singapore, and possibly in smaller numbers, compared to past recoveries from recessions, said economists following the release of the Labour Market Report 2020 last week.

The report, released by the Ministry of Manpower (MOM), said that while Singapore saw the sharpest fall in total employment in more than 20 years, foreigners bore the brunt of the layoffs.

After months of decline during the COVID-19 pandemic, resident employment – for Singaporeans and permanent residents – went up by 14,900 and rebounded to “slightly above pre-COVID levels”, said MOM.

This is in contrast to the 181,500 jobs lost by non-resident workers in 2020.

Maybank Kim Eng’s regional co-head of macro research, Dr Chua Hak Bin, said that the jobs situation for foreigners may not be a flash in the pan.

“Stricter foreign worker measures and border controls will likely impede the hiring of foreign workers, even for the skilled segment. There is a structural element, not just cyclical, as policies shift towards reducing the reliance on foreign labour,” he told CNA.

In recent years, the Government has gradually tightened the flow of foreign workers, and last year, the qualifying salaries for S Passes and Employment Pass holders were raised again.

The minimum qualifying salary for S Passes, which are for mid-skilled employees, went up to S$2,500 last year, and the quota for foreign workers was cut for some industries. The minimum salaries for EP holders also went up to S$4,500.


MOM said that non-resident employment declined in all sectors, with the bulk in construction and manufacturing. Three-quarters of the decline was from holders of work permit and other work passes, which are generally in lower-skilled jobs.

But there was also a fall in skilled foreign labour, with a 26,000 decrease in S Pass holders and 16,700 fewer EP holders.

While there is no breakdown by sector for S Pass and EP holders, Dr Chua said that the industries shedding foreign workers are probably in the sectors where job losses have been large. These are in construction, manufacturing and food & beverage services in 2020.

“Hard-hit sectors like aviation and accommodation probably shed more foreign workers, as wage subsidies for retaining locals were especially generous,” he added.

Mr Monty Sujanani, country manager of recruitment agency Robert Walters Singapore said that in general, companies have been cautious with hiring during COVID-19.

“Even before COVID-19, companies have always been focused on hiring Singaporeans first due to the TAFEP regulations though there is now greater opportunity to support local hires, particularly Singaporeans who have been made redundant or retrenched,” he said.

“At the same time, we have also seen a number of expatriates/foreign professionals moving back home which has created more opportunities for Singaporeans and PRs.”

He added that for foreigners based overseas, it has become more challenging to move them to Singapore, given the travel and border restrictions as well as the changes to EP and dependent pass requirements.

MOM earlier this month tightened the requirements for dependents of foreigners who want to find work here.

CIMB Private Bank economist Song Seng Wun said that the Government’s “interventionist” approach stood out during this recession and played a part in helping locals retain jobs.

“They acted fairly quickly to come out with support measures to encourage businesses to retain local workers, wherever they can,” he said. “And obviously, when you have a shutdown, for quite a period, you ended up with foreigners losing their jobs.”

He agreed that the Government was trying to “wean” businesses off foreign workers post-pandemic. It’s a “fine, balancing act”, he said.

“We haven’t lost that attractiveness as a place to live and work. So it’s a question of how much companies want to pay for that. Obviously, we do not want to be at the point where businesses find it just too expensive, and not worth the hassle (of hiring locals). I don’t think we’ve reached that point.”


But DBS senior economist Irvin Seah pointed out that when foreigners lose jobs here, it doesn’t necessarily mean that the jobs will go to resident workers.

Companies can choose to restructure and use more technology, or for certain positions, hire remotely – and the worker does not even have to be in Singapore. But he said they are also more likely to hire a resident who may not have the full set of skills, then give the person training for the job role.

Mr Sujanani of Robert Walters said that this is already happening for some firms.

“Companies will need to hire based on potential rather than with 100 per cent skills that they need because there is a limited pool of talent and it’s better to provide upskilling opportunities on the job for talent to acquire the skill sets they need,” he said.

“This also doubles up as an attraction and retention strategy. More forward-thinking companies are already starting to do this.”

Dr Chua felt that the longer-term implications from stricter foreign worker policies will be weaker potential GDP growth, job creation and fiscal revenue.

“Costs of living and inflation might also be higher if firms cannot increase productivity and have to raise prices because of higher labour costs,” he said.

Source: CNA/hm(gs)

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