Singapore’s labour market shows signs of strain amid slowing economic growth

Singapore’s labour market continued to grow in the first quarter of 2025 but at a noticeably slower pace, according to preliminary data released by the Ministry of Manpower (MOM) on 28 April. The findings have raised serious concerns about the resilience of the workforce as economic pressures mount. The report highlighted that total employment grew by just 2,300 in the first quarter, a marked drop from the seasonal increase of 7,700 in the previous quarter and lower than the 3,200 recorded in the same period last year. Resident employment continued to rise in sectors like Health & Social Services and Financial Services. However, there were contractions in key outward-oriented industries, such as Professional Services, Manufacturing, and Information & Communications. Notably, growth in non-resident employment was fuelled solely by an increase in Work Permit Holders in lower-skilled roles, primarily in Administrative & Support Services and Community, Social & Personal Services. This trend has sparked concerns over the availability of higher-value jobs for local workers. MOM did not provide a detailed breakdown of the share of employment growth between residents and non-residents, making it difficult to assess how much of the gains are benefiting Singaporean citizens. Unemployment rates edged up slightly, with the resident unemployment rate increasing from 2.8% in December 2024 to 2.9% by March 2025. The citizen unemployment rate remained at 3.1% in March, higher than the 2.9% recorded in December. Although MOM noted that unemployment remains within the non-recessionary range, the upward trend has raised questions about the underlying health of the labour market. The MOM report did not mention the overall unemployment rate, which is typically included alongside the citizen and resident unemployment rates in all previous MOM quarterly reports. One has to search the MOM's Statistical Table on Unemployment to see that the overall unemployment rate, which includes foreigners, has risen from 1.9 per cent to 2.1 per cent. The number of retrenchments fell to 3,300 in the first quarter, down from 3,680 previously. Retrenchment rates remained low at 1.3 per 1,000 employees. Despite this, business reorganisation and restructuring continued to dominate as key reasons for layoffs, reflecting underlying adjustments in the economy rather than industry-specific downturns. MOM cautioned that the slowing employment growth and rising unemployment mirror Singapore’s deteriorating economic outlook. External factors, such as global trade tensions and slowing regional economies, have contributed to more cautious business sentiment. According to MOM, hiring intentions weakened between December 2024 and March 2025. Fewer employers are planning to expand their workforce or increase wages in the near future. While the Government has introduced several initiatives in Budget 2025, including the SkillsFuture Workforce Development Grant and enhanced career transition support programmes, there are concerns that these may not be sufficient if global economic conditions continue to worsen. Career Health SG and the SkillsFuture Jobseeker Support scheme aim to empower workers to upskill and navigate economic shifts. However, the question remains whether workers can pivot quickly enough to keep pace with the changing demands of the labour market. The newly established Singapore Economic Resilience Taskforce, formed on 16 April 2025, will explore further measures to bolster the economy and workforce. However, its impact is yet to be seen. The preliminary figures present a sobering picture for Singaporean workers. The contraction in employment in high-skilled, outward-oriented sectors is especially troubling, as these industries traditionally offer well-paying and stable jobs. With global uncertainties set to persist, Singaporean workers face a growing need to adapt swiftly through upskilling and career transformation efforts. However, success will depend not just on individual effort but also on effective support structures and timely government intervention. The Labour Market Report for the first quarter of 2025, to be released in mid-June, will offer a more comprehensive assessment, including sectoral employment breakdowns and re-entry rates among retrenched workers. In the meantime, MOM has urged workers to make full use of available programmes to strengthen their employability in an increasingly unpredictable environment.