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Analysts say labour market rebound aided by temporary jobs, subsidies; hiring sentiment still weak

SINGAPORE — Resident employment levels may have rebounded to slightly above pre-Covid-19 levels, but economists warned that hiring sentiment among firms remains weak, and some jobs taken up last year are temporary and heavily subsidised by the Government.

Economists said that any substantial, long-term improvement in the labour market is tied to the eventual reopening of borders.

Economists said that any substantial, long-term improvement in the labour market is tied to the eventual reopening of borders.

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  • Resident employment has rebounded to slightly above pre-Covid-19 levels
  • Economists said that hiring sentiment is still weak though
  • Many jobs taken up over recent months are temporary and subsidised by the Government
  • More significant improvements to the labour market are likely at the end of 2021

 

SINGAPORE — Resident employment levels may have rebounded to slightly above pre-Covid-19 levels, but economists warned that hiring sentiment among firms remains weak, and some jobs taken up last year are temporary and heavily subsidised by the Government.

Labour market statistics released on Tuesday (March 16) by the Ministry of Manpower (MOM) showed that among retrenched residents who found jobs, a higher proportion went into the administration and support services sector than into other industries, suggesting that these jobs are temporary.

Last month, an annual employment survey found that more than a fifth of fresh graduates from Singapore’s public universities held part-time or temporary jobs last year in the midst of the Covid-19 pandemic, more than treble the proportion in 2019.

While the labour market here is seeing improvements, Mr Irvin Seah, senior economist at DBS bank, said that there is concern over whether “this is a false dawn”.

“Some of these positions are temporary and heavily funded through policy support. The key challenge is converting them into permanent positions.” 

Ms Selena Ling, OCBC bank's head of treasury research and strategy, said that hiring sentiment is still weak as companies remain cautious about the extent of economic recovery. So, any new hires would either be on a part-time or contract basis.

While some sectors are seeing growth and adding jobs, such as the information and communications sector, it is not enough to support the contraction in other sectors such as tourism and aviation, she added.

If plans to reopen borders and introduce vaccination passports go according to plan, alongside improvements in the Covid-19 situation in other countries, economists told TODAY that the labour market here could see a more pronounced improvement towards the end of this year.

An important indicator to look out for is the ratio of job vacancies to unemployed individuals, which was at 0.77 in December 2020. It showed that there were more unemployed people than jobs available for hire.

MOM’s latest report also revealed that the rebound in the number of employed residents last year stood in stark contrast to the jobs lost among foreign workers.

The number of employed residents — citizens and permanent residents — rose by 14,900 over the whole of last year, but the number of employed foreign workers fell sharply by 181,500, the bulk of whom were work permit holders in construction and manufacturing.

With the huge drop in foreign employment, MOM said that non-residents accounted for 29.3 per cent of the total number of workers in December 2020, which stood at 3.36 million — a marked drop from 33.1 per cent a year before.

Economists said there were several factors that led to the changes in the makeup of Singapore’s workforce.

Policies that favoured the hiring of residents, such as subsidising the wages of citizens through the Job Support Scheme, as well as the tightening of foreign manpower policies, had led to the sharp drop in foreign employment and a slight increase in resident employment.

Another factor was the border restrictions to curb the spread of Covid-19.

Mr Barnabas Gan, an economist at United Overseas Bank (UOB), said that some foreign workers might have chosen to leave Singapore when borders closed.

“There is a sudden and quick drop in employment numbers during this period. So when employers realise that some of their foreign labour can’t come back to local firms, there may be a need to employ resident labour,” he said.

“There is structural change in terms of labour supply and demand because of Covid-19.”

The partial lockdown in April and May last year, which disproportionately affected industries such as construction, tourism and hospitality that hire more foreigners, could be another reason for the sharp drop in foreign employment, Ms Ling of OCBC said.

The economists were unsure whether this trend of a declining proportion of foreign workers in the workforce will continue given the unpredictability of how the pandemic will pan out.

The Government is still prioritising resident employment, so the trend could last throughout this year, Ms Ling said.

With the economy recovering unevenly, as some sectors grow while others such as tourism still languish, a scenario where certain sectors might be clamouring for manpower, thereby necessitating a boost in the supply of foreign labour, is not set to happen soon, the economists said.

Mr Gan of UOB said that the pace of Singapore’s economic recovery, which would be a key factor in boosting labour demand, is tied to the eventual reopening of borders.

Mr Seah of DBS said that he would not be surprised if some companies revert to relying on foreign manpower once borders are reopened and restrictions on foreign labour are eased.

However, he believes that the Government’s efforts in tightening foreign manpower could have some lasting impact on keeping the number of foreign workers down even when borders reopen.

“The Covid-19 phenomenon has proven that it’s possible to hire locals. There are locals available willing to take up some of the jobs left behind by the foreigners,” he said.

Related topics

foreign worker local hire employment Jobs Covid-19

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