Singapore’s Employment Growth Slows Amid Global Trade Tensions

Singapore’s labor market is showing signs of strain as global trade tensions cast a shadow over the city-state’s economic outlook. According to preliminary data released by the Ministry of Manpower (MOM) on April 28, 2025, total employment grew by just 2,300 between January and March, a sharp decline from the seasonal increase of 7,700 in the previous quarter. This slowdown, coupled with a slight uptick in the unemployment rate, has raised concerns about the resilience of Singapore’s workforce amid mounting external pressures.

Employment Growth Decelerates Across Sectors

The latest figures from MOM reveal a marked slowdown in employment growth for both residents—Singaporeans and permanent residents—and non-residents. The increase of 2,300 jobs in the first quarter of 2025 pales in comparison to the 3,200 recorded during the same period in 2024. While resident employment continued to rise in sectors like health, social services, and financial services, declines were evident in outward-oriented industries such as professional services, manufacturing, and information and communications.

Manufacturing, a key pillar of Singapore’s export-driven economy, saw a particularly concerning drop, with employment falling by 800 in the first quarter. Layoffs in the sector also rose for the second consecutive quarter, reaching 900, according to DBS Bank senior economist Chua Han Teng. Retail trade, another significant employer, experienced a reduction in resident jobs as seasonal hiring for the year-end festive period tapered off.

Non-resident employment growth, meanwhile, was driven entirely by work permit holders in lower-skilled roles, primarily in administrative, support, and community services. This trend underscores a growing reliance on foreign labor in specific sectors, even as overall hiring slows.

Unemployment Edges Up, But Below Recession Levels

The resident unemployment rate in Singapore rose slightly to 2.9 percent between January and March 2025, up from 2.8 percent in December 2024. For Singaporeans specifically, the rate held steady at 3.1 percent in March compared to February, though it remains higher than the 2.9 percent recorded at the end of last year. Despite this uptick, MOM noted that these figures are still below the typical range observed during recessionary periods.

Historically, Singapore’s overall unemployment rate between 2015 and 2019 fluctuated between 1.8 percent and 2.3 percent. For citizens and permanent residents, it ranged from 2.5 percent to 3.3 percent, and for Singaporeans alone, it was between 2.7 percent and 3.5 percent. While current rates do not signal an immediate crisis, they reflect a cautious mood among employers, with fewer expecting to hire or raise wages in the coming months compared to late 2024.

Retrenchments, however, offered a sliver of positive news. The number of layoffs dropped to 3,300 in the first quarter of 2025, down from 3,680 in the preceding quarter. This translates to 1.3 retrenchments per 1,000 employees, compared to 1.5 previously. MOM attributed most layoffs to business reorganization or restructuring, with only a small proportion linked directly to recessionary pressures or industry downturns.

Services Sector Under Pressure

The services sector, which encompasses retail, food and beverage, and information and communications, is feeling the brunt of external uncertainties and subdued consumer spending. The Monetary Authority of Singapore (MAS), in its April 2025 macroeconomic review, highlighted that job demand in these industries has been notably affected. Despite this, labor cost increases in the sector remain below post-Covid-19 peaks, partly due to transitional wage support under the Progressive Wage Credit Scheme, which has helped mitigate unit labor cost pressures.

Interestingly, productivity in services appears to be on the rise, as firms consolidate or economize their labor inputs—measured by the number of workers or hours worked. However, MAS warned that a sharper-than-expected decline in aggregate labor demand could lead to more pronounced slack in the market, potentially driving up unemployment and reducing job vacancies further in 2025.

Global Trade Tensions Loom Large

The primary driver of Singapore’s labor market challenges is the escalating global trade conflict, particularly the revised reciprocal tariffs set to be introduced by US President Donald Trump in July 2025. Economists predict that these policies will magnify disruptions to international trade, with significant repercussions for a trade-dependent economy like Singapore. Brian Lee, an economist at Maybank Investment Banking Group, cautioned that employment growth could turn negative in the second half of the year as these tariffs take effect.

“With a more challenging business environment, companies are likely to be more conservative with wage increments and headcount expansions” said Lee. He also suggested that a fiscal support package, potentially including wage subsidies, could be rolled out by the third quarter to cushion the impact on businesses and workers in vulnerable sectors.

Chua Han Teng of DBS Bank echoed these concerns, noting that trade policy uncertainty and weaker external demand due to rising global protectionism will likely hurt Singapore’s trade-related activities. “We expect the resilience of Singapore’s labor market to be increasingly tested in the coming months” he said.

MOM itself acknowledged that the moderation in employment growth and the slight rise in unemployment “mirror the deterioration” in Singapore’s economic outlook for the first quarter. The ministry pointed to increasing headwinds from global trade conflicts as a key factor dampening business sentiment.

Wage Growth at Risk

Looking ahead, the outlook for wage growth in Singapore appears muted. MAS projected that as firms scale back hiring and expansion plans amid economic uncertainty, employment growth across most sectors will likely decelerate from 2024 levels. This could translate into slower wage increases for workers, particularly in industries exposed to global trade fluctuations.

The central bank’s cautionary note underscores a broader concern: if labor demand weakens more rapidly than anticipated, the labor market could face significant challenges in 2025. A sustained reduction in job vacancies might exacerbate unemployment, particularly for residents in sectors already experiencing declines.

Policy Responses and Future Prospects

As Singapore navigates these turbulent economic waters, attention is turning to potential government interventions. The anticipated fiscal support package mentioned by Lee could provide a lifeline to struggling sectors, though details remain speculative at this stage. Such measures, if implemented, would likely aim to stabilize employment and bolster business confidence amid external shocks.

At the same time, the government’s existing Progressive Wage Credit Scheme has already played a role in easing labor cost pressures for employers, particularly in the services sector. Whether these initiatives can fully offset the impact of global trade disruptions remains to be seen.

For now, Singapore’s labor market stands at a critical juncture. While unemployment rates and retrenchments have not yet reached alarming levels, the slowdown in employment growth and the looming threat of trade tariffs signal tougher times ahead. Workers and businesses alike are bracing for a period of uncertainty, with the hope that targeted policy measures can mitigate the worst of the fallout.

As the city-state grapples with these challenges, questions linger about the long-term implications for its workforce. Will Singapore’s labor market weather the storm of global trade tensions, or will deeper structural issues emerge in the months to come?