Singapore’s labor shortage problems are easing as unemployment continues to fall close to pre-pandemic levels, said Minister of Manpower Tan See Leng.

“For local unemployment, we are actually in a fairly good state. The unemployment has dropped. I think we’re close to pre-Covid levels,” he told CNBC’s “Squawk Box Asia” on Thursday.

“We are seeing the long-term unemployment, which is defined as anyone who’s unemployed for more than six months, has dropped to about 0.8%. Pre-pandemic levels [were] about 0.7%. So we’re actually quite close to what it was before Covid,” Tan added.  

Singapore’s total employment continued to expand by 42,000 (excluding migrant domestic workers) in the first quarter of 2022, according to official data. About 85% of that increase came from non-residents, as border restrictions were progressively lifted and employers backfilled vacancies for jobs that are more reliant on migrant workers.

“With the significant relaxation of border restrictions, we expect the non-resident workforce to continue to recover, catching up with the strong resident employment growth over the past two years. This will provide some relief to the current labor market tightness,” the manpower ministry said in the release of the first quarter figures.  

“At the same time, the deterioration of the external economic environment, due in part to the Russia-Ukraine conflict, has weakened the demand outlook for some of our outward-oriented sectors,” it added. 

The minister said that as border restrictions continue to be relaxed, more foreign workers are returning to Singapore, which would ease the labor crunch in some sectors, especially construction.

In May, the CEO of real estate company PropertyGuru Hari Krishnan highlighted that the construction sector was largely shut for around two years because of a lack of manpower, though the industry started to recover in 2021. Supply chain bottlenecks also affected building materials, he said.

“[With] the easing of the borders, we have seen a huge uptake in terms of the number of foreign workers returning back into Singapore. Our construction manufacturing process has somewhat recovered to more than 90% of pre-Covid levels,” said Tan.

As a result, construction activity “has gone up significantly,” he added. 

“The level of foreign workers [has] reached more than 90%. I think we are looking at probably about 95% of pre-pandemic levels. So many of the projects have all started and many contractors are also catching up for lost time.”