Firms hired more locals and fewer foreigners in the first half of this year as foreign labour curbs continue to bite.

Excluding maids, foreign employment growth slowed to 27,000 in the first six months of this year, down from 34,100 in the same period last year.

This is the slowest rate of increase since the first half of 2010, said the Ministry of Manpower (MOM) in its half-yearly labour market report yesterday.

In particular, there was a marked slowdown in the hiring of skilled foreign professionals who hold Employment Passes or S Passes. Their numbers grew by just 10,000 – a pace not seen since the global financial crisis in 2008 and 2009.

In contrast, local employment grew by 34,100 in the first half of this year, up from 22,800 the year before.

This is a “significant increase”, said Acting Manpower Minister Tan Chuan-Jin in a Facebook posting yesterday.

“We have been encouraging Singaporeans of various profiles to return to the job market and incentivising businesses to hire them. I hope to see this continue,” he added.

Mr Tan said the tightening of foreign labour growth is being felt in many quarters and causing pain for smaller companies.

He is therefore glad that more older workers and women are working, bringing the resident labour force participation rate to a record high of 66.6 per cent. This means two in three locals aged 15 and above are in the labour force.

The rate is comparable to other developed countries and may still grow, but the increase could be limited by “demographic constraints”, said MOM yesterday.

Elsewhere in the report, the ministry reported that productivity growth nationwide had dipped 2 per cent, as a result of labour force growth outstripping economic growth.

This is despite Singapore having been on a drive to increase the productivity of its companies and labour force, as part of a wider restructuring of its economy.

MOM warned that the labour market for the rest of this year will remain tight, especially in sectors like accommodation, food services, retail and construction.

The unemployment rate, which has been hovering at historic lows of about 2 per cent, rose marginally to 2.1 per cent in June.

The ministry said that it will closely monitor slight increases in unemployment among graduates (3.3 per cent to 3.6 per cent) and diploma holders (3.4 per cent to 3.9 per cent).

“This may largely be transitional,” it added.

Economists said that while the Government takes a tough stand on the inflow of foreign workers, it should not send the signal that Singapore does not welcome foreigners

Said DBS economist Irvin Seah: “I expect the Employment Pass numbers to continue to fall. I just hope that we will continue to remain attractive to top talent.”

Mr Tan acknowledged this yesterday

“We have to ensure we remain competitive and attractive because there still is a need to draw in the good jobs and opportunities for our people,” he wrote. “It is a delicate balancing act to moderate labour growth while encouraging quality economic growth that is productivity-driven.”