On September 14, 2023, the Ministry of Manpower (MOM) reported that Singapore’s labour demand is likely to ease further in the remainder of the year. This forecast follows indications of cooling in employment growth and job vacancies during the second quarter, as detailed in the latest Labour Market Report.

For the first time since Q2 2020, resident employment fell by 1,200, attributed to the conclusion of seasonal hiring in the food and beverage and retail sectors. However, MOM reassured that this contraction is expected to be temporary. Meanwhile, non-resident employment grew by 25,500, primarily in construction, resulting in total employment (excluding migrant domestic workers) increasing for the seventh consecutive quarter to 3.68 million, albeit at a slower pace than the 33,000 rise seen in Q1.

Economists, including OCBC’s chief economist Selena Ling, described the decline in resident employment as industry-specific rather than indicative of a broader economic downturn. Robust job growth in sectors like community, social, and personal services was offset by reductions in food and beverage services and retail trade, linked to seasonal hiring fluctuations.

MOM’s Ang Boon Heng noted that typically, there is a spike in hiring for temporary positions in the latter half of the year due to events like the Formula 1 Grand Prix and year-end festivities. While such activities may boost resident employment in Q3 and Q4, the increases are expected to be lower than in the same period the previous year, reflecting ongoing cooling in labour demand and a slower growth rate in the resident workforce.

Ling highlighted that external factors, such as China’s slow reopening and increased travel by Singaporeans, may have contributed to the cooling observed in Q2. Nevertheless, DBS economist Chua Han Teng indicated that the contraction should not be a cause for concern due to seasonality and anticipated recovery in the second half of the year.

Despite this, MOM warned of weak overall employment prospects for outward-oriented sectors, including manufacturing and finance. The ongoing recovery in tourism is expected to bolster air transport, accommodation, and consumer-facing sectors like retail and food services.

Job vacancies have declined for the fifth consecutive quarter to 87,900 in June, down from a peak of 126,000 in March 2022. Ang noted that while this may suggest challenging times, it could also reflect a more reasonable demand level after previous shortages. The ratio of job vacancies to unemployed persons dipped below two for the first time since June 2021.

Hiring demand may continue to soften, as only 58.2% of surveyed companies indicated plans to hire in the next three months, a decline from 64.8% in March. Retrenchments in Q2 fell to 3,200, mainly driven by restructuring, with the information and communications sector being the most affected. However, MOM expects retrenchments to exceed 10,000 this year, despite the recent decline.

As of July, the unemployment rate registered a slight increase to 2% overall, with higher rates for residents and citizens. Nevertheless, DBS and Maybank economists anticipate any increase in unemployment will be modest, suggesting that the economy is on an upward trajectory, with signs of recovery in manufacturing, trade, and exports. The resident long-term unemployment rate remained low at 0.5%, with slightly higher rates among older workers.

In light of these challenges, support programmes for business transformation, such as Workforce Singapore’s Career Conversion Programme, have been introduced to aid reskilling and prepare employees for transitions in the marine and offshore energy sectors, reflecting the government’s commitment to adapting to changing economic conditions.