Economists Weigh In on the Balance Between Low Unemployment and Labour Market Health
Singapore’s unemployment rate has been steadily low, with the overall seasonally adjusted unemployment rate at 1.9% in June 2023, and resident unemployment at 2.7%. This marks a period of stability for the city-state, which has garnered attention for maintaining a relatively low unemployment rate amid global economic volatility.
Economists suggest that Singapore’s current labour market situation could be considered in a “Goldilocks” state — not too high, not too low. The tight labour market, as observed by Maybank economist Brian Lee, stems from a few key factors, including the pandemic-induced shortage of foreign workers and the “Great Resignation” phenomenon experienced globally, where workers re-evaluated their career paths and demands.
This dynamic is viewed positively by some, as frictional unemployment and some turnover are essential for a flexible and adaptive labour market. The challenge, however, remains in balancing this with sustainable long-term employment growth. Singapore’s low unemployment rate signals a healthy economy, but economists warn that continued labour shortages, especially in foreign worker supply, could pose challenges to future growth.
As the global economy shifts and Singapore’s domestic conditions evolve, economists will continue to assess how the labour market can remain dynamic while avoiding inflationary pressures.
