The Rise in Layoffs Amid Labor Market Tightness Signals Caution in Singapore’s Economy
The number of retrenchments in Singapore surged to 4,100 in the third quarter of 2023, marking the highest quarterly figure since the fourth quarter of 2020, during the COVID-19 pandemic. This increase in layoffs comes despite the labor market having expanded for eight consecutive quarters. According to the Ministry of Manpower (MOM), the rise in retrenchments was particularly notable in wholesale trade, which faced a weaker external outlook.
The 4,100 layoffs recorded in Q3 is a notable jump from 3,200 in the previous quarter, bringing the year-to-date retrenchment figure to 11,120, nearly doubling the total retrenchments of 6,440 in 2022. The primary reason for the job cuts continues to be business restructuring, although some sectors saw stable or declining figures.
While unemployment rates remain low due to ongoing labor market tightness, they have been gradually rising, with the overall unemployment rate standing at 2%. MOM warned of a potential continued upward trend in the unemployment rate, although it acknowledged that most retrenched workers have been able to find new employment relatively quickly.
The sectors experiencing job growth include financial services, professional services, and health and social services, while employment in sectors like food and beverage services, and retail trade has decreased due to seasonal hiring shifts. On the other hand, non-resident employment grew in construction, retail trade, F&B services, and administrative support.
The ministry also noted that business expectations for hiring have worsened, with fewer firms planning to recruit in the upcoming months, reflecting growing caution due to global economic uncertainties. Experts predict that retrenchments may continue, especially in sectors tied to external demand, such as wholesale trade and manufacturing, while the services sectors may still offer employment opportunities.
Despite the rise in retrenchments, total employment in Q3 grew by 24,000, mainly driven by sectors with higher-paying jobs, signaling some resilience in the labor market.
