April 29, 2025
SINGAPORE – The unemployment rate in Singapore ticked up slightly in the first quarter of 2025, with employment growth slowing as escalating global trade tensions put a dent on business sentiment.
Singapore’s total employment grew by 2,300 between January and March, down from the seasonal increase of 7,700 from the previous quarter, and 3,200 from the same period in 2024, accosharrding to preliminary data released by the Ministry of Manpower (MOM) on April 28.
MOM said this reflects smaller increases in employment for residents – Singaporeans and permanent residents (PRs) – as well as non-residents.
Looking ahead, workers in Singapore could experience slower wage growth as labour demand could soften further in 2025, according to the Monetary Authority of Singapore (MAS) in a separate report also out on April 28.
The central bank, in its April macroeconomic review, said: “As firms pull back on their hiring and expansion plans amid economic uncertainty, employment growth for most sectors should step down from last year.”
Mr Brian Lee, an economist at Maybank Investment Banking Group, said the bank expects a fiscal support package by the third quarter, which could include wage subsidies to cushion the impact on companies and workers in sectors hit by the global trade war.
“With a more challenging business environment, companies are likely to be more conservative with wage increments and headcount expansions,” he added.
Meanwhile, the resident unemployment rate came in at 2.9 per cent between January and March. The figure was 2.8 per cent in December 2024. MOM publishes unemployment rate figures monthly.
Although the unemployment rate of Singaporeans held steady at 3.1 per cent in March compared with February, it was higher than the 2.9 per cent recorded in December 2024. These are seasonally adjusted figures.
But the unemployment rates are still below the range typically seen during a recession.
Overall, the unemployment rate from 2015 to 2019 ranged from 1.8 per cent to 2.3 per cent. It was 2.5 per cent to 3.3 per cent for citizens and PRs, and 2.7 per cent to 3.5 per cent for Singaporeans.
There were 3,300 retrenchments in the first quarter of 2025, down from 3,680 in the previous quarter.
For every 1,000 employees, 1.3 were retrenched in the January to March period, lower than 1.5 in the preceding quarter.
The ministry said retrenchments were stable or lower across most sectors, with business reorganisation or restructuring the top reason for such layoffs. Recession or downturn in the industry accounted for only a small proportion of retrenchments.
Services sector in the spotlight
The MAS noted that the job demand in the services industries – which include retail, food and beverage, and information and communications – was likely affected by greater uncertainties in the external business environment and subdued spending among consumers in Singapore.
The labour cost increase in services, which takes into account the total compensation of both residents and foreigners, remains below its post-Covid-19 peaks.
Productivity, on the other hand, seems to be rising for the sector as firms could have been consolidating or “economising” their labour inputs, said MAS. Labour input is generally measured by the number of workers or the hours they work in a given period.
The central bank said the transitional wage support provided to employers under the Progressive Wage Credit Scheme has helped to reduce unit labour cost pressures.
But it warned that if aggregate labour demand were to fall more quickly than expected, slack in the labour market could emerge more conspicuously in 2025.
A significant reduction in labour demand may cause further declines in job vacancies, leading to greater unemployment.
MOM noted that while resident employment continued to increase in the health and social services and financial services sectors, there are declines in some outward-oriented sectors such as professional services, manufacturing, and information and communications.
DBS Bank senior economist Chua Han Teng pointed out that manufacturing employment fell by 800 in the first quarter of 2025, while layoffs in the sector rose for the second straight quarter to 900.
The number of Singapore residents with jobs also fell in the retail trade sector as seasonal hiring for the year-end festive period eased.
Growth in non-resident employment was driven entirely by work permit holders in lower-skilled jobs, mainly in administrative and support services and community, social and personal services.
Mr Lee highlighted that employment growth will likely turn negative in the second half of the year as disruption to global trade is magnified when US President Donald Trump’s revised reciprocal tariffs are introduced in July.
MOM noted that the moderation of employment growth and slight uptick in unemployment “mirror the deterioration” in Singapore’s economic outlook in the first quarter, with increasing headwinds arising from escalating global trade conflicts.
Business sentiments have become more cautious, with fewer employers expecting to hire or raise wages in the next three months compared with December 2024.
Mr Chua added that trade policy uncertainty and weaker external demand stemming from rising global protectionism due to the evolving US tariff developments will likely hurt Singapore’s trade-related activities, especially in the second half of 2025.
“We expect the resilience of Singapore’s labour market to be increasingly tested in the coming months,” he said.