More locals had jobs in the first half of this year, but the pace of employment growth slowed.
Meanwhile, the number of foreigners employed here, excluding maids, grew at a faster pace and overtook the growth in local employment for the first time in three years, according to data released by the Ministry of Manpower (MOM) yesterday.
Local employment grew by 5,300 in the first half of the year, down from 20,900 in the second half of last year, and 6,500 a year ago.
The growth was in sectors such as community, social and personal services, professional services, financial and insurance services, and information and communications, said the ministry.
Foreign employment, excluding maids, grew by 11,600 in the first half of this year, up from 10,500 in the second half of last year and 400 a year ago. MOM attributed this mainly to growth in the service and construction sectors.
More than half of the increase, or 6,400, was from work permit holders. There were also 3,200 more employment pass holders.
The total workforce growth, excluding maids, slowed in the first half of the year to 16,900, down from 31,400 in the second half of last year, which MOM said had been boosted by the festive season.
Economist Selena Ling, head of treasury research and strategy at OCBC Bank, said companies could be turning to foreigners because of a skills shortage among locals in areas such as nursing, and information and communications technology.
"It is probably a reflection of some of the flexibility given for employing specific type of niche talent in certain industries," she said.
She added that a calibrated approach is needed. "If you restrict labour too much in sectors that are still growing, there is a risk it might backfire if some of those activities also close or shift offshore."
DBS senior economist Irvin Seah said that another reason could be rising wages for locals, which could lead companies to prefer foreigners for lower-skilled jobs.
He said it is worrying that the faster growth in foreign employment comes on the back of the slowing employment growth in the service sector, where many locals work.
The Government's move to raise the service sector Dependency Ratio Ceiling, which caps the proportion of foreigners a company can employ, over the next two years "is well justified in the light of what we are seeing now", he added.
MOM said employment growth in the service sector, going forward, is expected in both outward-oriented and domestic-oriented segments, supported by demand for enterprise information technology solutions and payment processing services, as well as the ramping up of operations in healthcare facilities.
The sector added 19,000 workers in the first half of the year, excluding maids.
The hiring outlook in the manufacturing sector, which employed 4,700 fewer workers in the first half of the year, is likely to remain cautious due to weak global demand for semiconductors.
However, the aerospace and food and beverage manufacturing segments should continue to do well.
The construction sector, on the other hand, added 2,800 workers in the first half of the year.
The ministry said construction output is likely to see a turnaround this year after three consecutive years of contraction, which should support employment growth in the sector.