Between April and June of this year, Singapore experienced a significant wave of layoffs, with approximately 4,500 workers losing their jobs. This figure represents the highest rate of retrenchment in over five years, showing a 17% increase from the prior quarter. The last time layoffs had reached this level was during the final quarter of 2020 when 5,640 workers were let go.
The Underlying Reasons
The spike in retrenchment occurred mainly within sectors focused on international operations, such as information and communications and manufacturing. This trend largely resulted from business restructuring processes. Companies within these sectors are particularly susceptible to various factors impacting their operations, including geopolitical tensions, shifts in trade policies, and fluctuations within the global economy. Their dependence on external demand makes them vulnerable and forces them to continuously reassess their operational models, leading to restructuring and rationalization of their workforce.
Despite the surge in layoffs, it is important to note that the numbers are still lower than those recorded during the global financial crisis in 2009 and the Covid-19 pandemic. Furthermore, Singapore’s broader labor market has shown resilience during this period. Overall employment grew by 10,700, and the unemployment rate remained at a steady 2%.
Economic Performance and Projections
Singapore’s economy expanded by 5.7% year-on-year during the same quarter, a rate slightly slower than the preceding three months but exceeding the government’s full-year forecast. This positive economic performance has led several economists to revise their 2026 growth projections upwards.
With regard to labor market projections, there was a marked improvement in June. Approximately 43.9% of businesses surveyed indicated plans to increase their workforce in the following three months, an increase from 40.6% in May. Additionally, around 29.3% of firms expected to raise wages during the same period, up from 23.7%. The expectation to lay off staff fell to 2.7% from the previous 3.2%.
Although these indicators demonstrate the resilience of labor demand, expectations remain below the levels seen before the energy shock triggered by the Middle East conflict. This suggests that businesses are likely to adopt a cautious approach to hiring and wage decisions in the near future.
Questions & Answers
What sectors were most affected by the wave of layoffs?
Primarily, the wave of layoffs occurred within sectors focused on international operations such as information, communications, and manufacturing, largely a result of business restructuring processes.
What factors make these sectors particularly vulnerable?
These sectors are particularly susceptible to various factors, including geopolitical tensions, shifts in trade policies, and fluctuations within the global economy. Their reliance on external demand often forces them to reassess their operational models.
How has the broader labor market in Singapore responded to these changes?
Despite the surge in layoffs, Singapore’s broader labor market has shown resilience. Overall employment grew, and the unemployment rate remained stable. However, projections indicate that businesses may adopt a cautious approach to hiring and wage decisions in the near future.
