Singapore’s strong economic growth masks cooling job market

AI adoption could reduce manpower needs, particularly in services sector, Maybank said.

Singapore’s strong economic growth is not translating into a comparable increase in employment, with job gains running well below the levels seen during previous economic booms, according to Maybank.

Employment excluding migrant domestic workers grew by 20,800 in the first half of 2026, while resident employment increased by 7,600. Real GDP, meanwhile, expanded 6.1% year on year over the same period.

During 2004-07, 2011-13 and 2021-22, average annual employment growth reached 133,000, whilst resident employment grew by an average 60,100.

“The Singapore economy is running hot on the AI boom, but the job market, paradoxically, appears to be cooling,” the bank said.

The current AI-driven and capital-intensive growth cycle is generating far fewer jobs, particularly in modern services, it noted.

Employment in financial, professional, and infocomm services increased by only 1,300 jobs in the second quarter of 2026, following contractions in the previous two quarters.

The labour market is also showing signs of weaker hiring and job mobility. Retrenchments rose to 4,600 in the second quarter, the highest level since the fourth quarter of 2020, with services accounting for most of the job cuts.

At the same time, the monthly recruitment rate fell to 1.4%, a historical low outside the pandemic years, whilst the monthly resignation rate declined to a record low of 1% in the second quarter.

The report describes Singapore’s labour market as “low-hire, low-quit,” reflecting subdued recruitment and job mobility alongside increased retrenchments.

The outlook is also expected to remain subdued despite continued GDP growth. Annual employment growth excluding migrant domestic workers is forecast to slow to 40,000 in 2026 and 35,000 in 2027, from 55,500 in 2025.

Resident employment growth is projected to be weaker at 12,000 in 2026 and 10,000 in 2027, compared with 11,600 in 2025. These would represent the most subdued employment growth figures since 2021.

Forward-looking surveys also point to cautious hiring. ManpowerGroup’s fourth-quarter Net Employment Outlook was stable from the previous quarter but moderated from a year earlier.

Separately, a Singapore National Employers Federation survey found that 54% of companies have no plans to increase headcount in 2027, whilst another 6% plan to cut jobs.

The report said existing government support measures could be expanded as workers face longer re-entry periods following retrenchment. These include SkillsFuture Jobseeker Support, which provides unemployed individuals with up to $6,000 over six months, as well as private and public sector traineeships, career transition measures, job placements, and Career Conversion Programmes that provide salary support to employers reskilling mid-career workers.

It also suggested raising the current $5,000 monthly income ceiling and extending the duration of financial support under the Jobseeker Scheme. Administrative minimum wage adjustments under the Progressive Wage Models may also need to be reviewed amid structural shifts in the resident labour market.

“Besides job security and unemployment, these structural shifts may have implications for retail spending; residential and commercial property demand; demographics; and widening income disparities,” the bank said.