Labour market resilience: how do firms balance caution and hiring?

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Firms Navigate Economic Uncertainties by Balancing Cautious Hiring Amidst Resilient Labour Demand

Singapore's labour market demonstrated continued expansion in the second quarter of 2026, with a total of 10,700 jobs added, an increase from the 9,400 jobs created in the preceding quarter. This marks the 19th consecutive quarter of employment growth. While resident employment saw a more moderate increase, primarily within essential and public services, the overall expansion was predominantly fueled by non-resident employment, particularly in the construction and manufacturing sectors. Concurrently, unemployment rates remained stable at a low of 2.0% in June 2026, indicating an underlying strength in the job market.
Non-Resident Employment Drives Overall Job Growth

The primary driver of employment growth in the second quarter of 2026 was non-resident employment. Following a period of slower growth in the first quarter, this segment saw a significant uptick, contributing substantially to the overall increase in jobs. This surge was most pronounced in sectors such as construction and manufacturing, indicating a demand for labour in these areas that outpaced domestic supply or availability.
Resident Employment Growth Focused on Essential Services

Resident employment continued its upward trajectory, though at a more subdued pace than in previous periods. The growth in this category was largely concentrated in essential and public services. These sectors, which typically include areas vital for public welfare and government operations such as healthcare, education, and public administration, often experience more stable employment trends irrespective of broader economic fluctuations, reflecting a consistent need for their services.
Increased Retrenchments Amidst Business Restructuring

Despite the overall job growth, the number of retrenchments saw an increase, rising from 3,830 in the first quarter to 4,500 in the second quarter of 2026. This brought the retrenchment incidence rate to 1.9 per 1,000 employees, up from 1.6. This rise was concentrated in outward-oriented sectors, a consequence of ongoing business restructuring. However, it is important to note that these retrenchment figures remained significantly below the levels typically observed during periods of economic downturn, suggesting that the current adjustments are more sector-specific rather than indicative of a widespread economic contraction.
Cautious Optimism Characterises Future Outlook

Looking ahead, indicators such as hiring, wage, and retrenchment expectations suggest that labour demand remains robust. Nevertheless, firms are exercising a degree of caution. This measured approach stems from a combination of prevailing economic uncertainties and the continued process of business restructuring within certain industries. This suggests a strategy where companies are keen to maintain a workforce capable of meeting demand but are mindful of potential external shocks and internal adjustments, leading to a balanced approach between securing necessary talent and managing potential risks.

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Labour market resilience: how do firms balance caution and hiring?

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