Foreign worker inflow slows again

MOM figures show that firms are hiring more locals, say analysts
By Amelia Tan, The Straits Times, 15 Mar 2014

THE flow of foreign workers into Singapore has slowed for the second year running, new figures show.

More foreign workers continue to be taken in, but at a slower rate. Last year, the pool of foreigners, excluding foreign domestic workers, grew by 48,400.

This is almost a third down from the 67,100 foreign workers added in 2012. In 2011, 79,800 foreign workers were added to the workforce here.

Most of the additional foreign help went to the construction sector, which employed 31,600 more workers for upcoming projects such as new MRT lines, said the latest labour market statistics released by the Ministry of Manpower (MOM) yesterday.

One figure which saw an uptick was the number of foreign professionals hired last year, following a dip in 2012. The number of Employment Pass (EP) holders grew 1,300 last year while in 2012, the pool shrank by 1,600.

Economists said the fall in the number of foreign professionals employed in 2012 was due to higher income requirements introduced that year. Firms have since adjusted to the changes, and hiring for EP holders picked up last year.

Such tighter controls have driven up demand for locals, leading to higher pay for Singaporeans.

The real median monthly income for fully employed citizens grew 4.6 per cent last year, up from a 1.2 per cent rise in 2012, said the MOM report.

The number of locals with jobs grew by 82,900 last year, up from 58,700 in 2012.

The seasonally adjusted jobless rate among Singaporeans dropped slightly to 2.8 per cent as of last December, from 2.9 per cent in December 2012.

Economists said the MOM figures show that businesses are hiring more locals due to tighter restrictions on employing foreigners.

The increase in wages is due to competition among firms to hire locals, as well as better economic growth last year, the economists added.

They expect growth in foreign worker numbers to continue to slow this year and more businesses to feel the squeeze.

Bank of America Merrill Lynch economist Chua Hak Bin said: "More firms will struggle to survive this year, especially small and medium-sized enterprises, which are heavily dependent on labour and are unable to adjust."

There are signs that some companies are already finding it hard.

Last year, 11,560 workers were laid off, a slight increase from 11,010 in 2012.

The upside of tightened foreign labour policies is that pay will continue to rise for Singaporeans this year, said analysts.

DBS economist Irvin Seah said: "Singaporean workers in sectors such as services, which are labour intensive but are facing foreign labour cuts, will probably benefit from good salary hikes."

Singapore needs to focus on achieving good and sustainable productivity growth by investing in technology and training workers to overcome higher manpower costs, said National University of Singapore labour economist Shandre Thangavelu.

"We should expect more efficient domestic firms to emerge and companies should emphasise productivity growth," he said.