NextFin News - Singapore’s labour market concluded 2025 on a note of resilient expansion, yet the final months of the year revealed a subtle but unmistakable shift toward caution as retrenchments ticked upward. According to the Ministry of Manpower (MOM) report released on March 20, total employment grew by 55,500 for the full year, a significant acceleration from the 44,500 recorded in 2024. This growth was underpinned by a robust 4.8% GDP performance in 2025, which surpassed initial government forecasts and provided a strong tailwind for hiring across both resident and non-resident segments.
The headline expansion, however, masks a more complex internal churn. While resident employment—comprising Singapore citizens and permanent residents—grew by 11,600, the bulk of the year’s gains came from the non-resident workforce, which added 43,900 positions. This disparity highlights the structural constraints of a domestic labour force that is nearing its natural ceiling of participation. The growth in foreign employment was largely concentrated in the construction sector, driven by work permit holders, while resident gains were anchored in the high-value corridors of financial services and healthcare.
Cracks began to appear in the fourth quarter of 2025. Retrenchments for the year reached 14,490, up from 13,020 in the previous year, with the final three months showing a slight sequential increase to 3,690. Perhaps more telling is the profile of those affected: residents accounted for nearly 74% of all retrenchments. The sectors most impacted—financial services and professional services—are precisely those that have traditionally been the engines of middle-class prosperity. This suggests that the "restructuring" cited by the MOM is hitting the professional, manager, executive, and technician (PMET) class with particular precision.
The paradox of the current market lies in the job vacancy ratio. Despite the rise in layoffs, there were 1.58 vacancies for every unemployed person in December 2025, an improvement from the September figure of 1.50. This indicates that the labour market is not so much shrinking as it is transforming. Firms are shedding roles in legacy functions while simultaneously hunting for talent in emerging areas like data analytics and software development. However, the re-entry rate for retrenched residents into new jobs within six months dipped slightly to 57.4% in the fourth quarter, suggesting that the skills gap is becoming harder to bridge for those displaced.
External pressures are now the primary variable for 2026. With U.S. President Trump’s administration pursuing a more protectionist trade agenda, Singapore’s "outward-oriented" sectors—manufacturing, information and communications, and wholesale trade—face heightened volatility. The MOM has already signaled that firms are expected to remain cautious in their hiring and wage decisions in the first half of 2026. While early January data showed a modest pick-up in sentiment, the looming threat of global trade disruptions and geopolitical instability in the Middle East continues to weigh on corporate confidence.
The outlook for the remainder of 2026 suggests a period of "low and stable" unemployment, but with diminishing returns on resident job growth. As the domestic labour pool tightens, the reliance on non-resident workers to fill construction and service roles will likely persist, even as the government pushes for higher productivity through automation. For the Singaporean worker, the message from the 2025 data is clear: the market is expanding, but the safety of a traditional career path is being replaced by a cycle of constant displacement and re-skilling.
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