Singapore's labor market, a glimmer of hope emerges as retrenchment figures take a downward turn for the second consecutive quarter. According to the latest preliminary data released by the Ministry of Manpower (MOM) on April 30, 2024, this trend accompanies a nuanced picture of employment growth, which, while positive, has shown signs of cooling compared to previous quarters.
The January-March quarter of 2024 witnessed a total employment growth of 4,900, a slight dip from the 7,500 recorded in the preceding quarter. Interestingly, this growth was exclusively attributed to Singaporeans and permanent residents (PRs), marking a significant shift in the composition of the workforce. In contrast, non-resident employment experienced a contraction for the first time since the third quarter of 2021. This was largely due to a cooling labor demand, particularly in the construction sector, as tighter foreign worker quotas came into effect.
Despite the deceleration in employment growth, the MOM's report sheds light on a labor market that remains resilient. The growth figures, though lower than the previous quarter, were still higher than those observed in the earlier quarters of 2023 and were comparable to growth rates seen in non-recessionary periods. This resilience is further underscored by the pickup in applications for higher-skilled non-residents, such as Employment Pass holders, in tandem with improved business expectations.
Retrenchments in the first quarter of 2024 fell to 3,000 from 3,460 in the fourth quarter of 2023, with business reorganization or restructuring cited as the primary reason. This ongoing transformation effort by businesses is a testament to the dynamic nature of Singapore's economy, which is expected to see further improvement in 2024. The MOM anticipates that labor demand will strengthen correspondingly, lagging behind economic growth.
However, the unemployment rates in March 2024 edged up slightly to 2.1 percent overall, 3 percent among residents, and 3.1 percent among Singaporeans. Despite this slight increase, the unemployment figures remain within the range observed during non-recessionary periods, indicating a stable labor market. The MOM had previously highlighted the possibility of a slight uptick in unemployment rates amid higher retrenchments in the latter half of 2023, suggesting that this was an anticipated adjustment rather than a cause for alarm.
The labor market's current state reflects the delicate balance between navigating post-pandemic recovery and adapting to structural changes within the economy. The decrease in retrenchments is undoubtedly a positive sign, indicating that businesses are gradually stabilizing and looking towards growth. However, the cooling employment growth highlights the challenges that lie ahead in fully recovering from the pandemic's impact and adjusting to the new normal.
As Singapore continues to forge ahead, the focus on upskilling the workforce and embracing technological advancements will be crucial in ensuring that the labor market not only recovers but thrives. The government's efforts in supporting businesses and workers through this transition period will be instrumental in shaping a resilient and dynamic labor market capable of withstanding future challenges.
