Labour demand 'expected to soften' in 2026 amid lower hiring plans
Singapore's labour market grew at a faster pace in the third quarter of 2025, according to new government data, with labour demand expected to moderate in the first quarter of 2026.
The latest Labour Market Report revealed that total employment grew by 25,100 in the third quarter of 2025, much stronger than the 10,400 increase recorded in the second quarter.
Unemployment also reached 2.0%, while the incidence of retrenchments hit 1.6 per 1,000 employees.
"Supported by continued economic growth, the labour market performed stronger than anticipated, with total employment growing at a faster pace, while unemployment and retrenchments remained low," the report said.
Employment changes
Resident employment was led by the Financial and Insurance Services sector, according to the report, while non-resident employment expanded mainly in Construction and Manufacturing.
On the other hand, ongoing global economic headwinds resulted in muted changes for the Information and Communications, as well as the Professional Services sectors.
Employment declines were also recorded in the Administrative & Support Services, as well as Wholesale Trade.
"The fall in Administrative & Support Services, mainly in Employment Activities, likely reflects reduced demand for outsourced and temporary roles such as HR and customer service officers," the report read.
Moderate labour demand coming
Looking ahead to 2026, the Ministry of Manpower said it expects reduced labour demand in the early parts of the year, further reinforcing earlier reports of weaker hiring sentiments during the period.
"Labour demand is expected to soften. Business expectations for 1Q 2026 point to fewer firms planning to hire or raise wages in the coming three months," the report read.
"At the same time, planned redundancies in the next three months have risen – from 1.9% of all firms in June to 2.3% in September, reflecting the continued uncertainty in the global environment."
Job vacancies have been trending low this year, easing to 69,200 in September 2025 from the previous 76,900 in June, according to government data.
Recruitment and resignation rates have also been trending down, and are now lower than their 10-year averages.
"This suggests that firms are managing headcount through natural attrition rather than actively laying off workers," the report read.
"Employees, who are perceiving fewer opportunities, are also switching jobs less frequently. The result is lower labour mobility."
The findings reflect previous reports of weaker hiring sentiment in Singapore. The ManpowerGroup attributed the situation to a "period of recalibration" for employers.
"More employers are focused on maintaining staffing levels or holding off on making staffing decisions while waiting to see how economic conditions evolve, while those hiring are doing so strategically, driven by organisational growth, diversity initiatives, and maintaining a competitive advantage," said Linda Teo, Country Manager of ManpowerGroup Singapore, in a statement.
