Singapore Q2 Retrenchments Hit 5-Year High at 4,500 Despite Job Growth

Singapore’s labour market sent conflicting signals in the second quarter of 2026. The Ministry of Manpower reported 4,500 retrenchments, up 17.5 per cent from the prior quarter and the highest since the final quarter of 2020. Yet total employment still grew by 10,700 residents and foreign workers, and the unemployment rate remained at 2 per cent. The divergence reflects a economy under strain in some sectors while others expand.

Why retrenchments jumped to a five-year peak

Retrenchments rose from 3,830 in the first quarter to 4,500 in the April to June period, according to Ministry of Manpower data released July 31. The increase was concentrated in outward-oriented sectors, chiefly information and communications and manufacturing. Foo See Yang, managing director at Persol Asia-Pacific, attributed the cuts to business restructuring driven by geopolitical tensions, trade policy shifts and global economic uncertainty. Companies in these sectors rely on exports, international trade and foreign investment, making them vulnerable to external shocks.

Employment growth masks sector weakness

Despite the retrenchments, Singapore added 10,700 jobs in the quarter, slightly above the 9,400 added in the first quarter. The unemployment rate held at 2 per cent. Growth was driven by foreign workers in construction and manufacturing, while Singaporean and permanent resident employment grew more slowly, concentrated in essential and public services. The share of firms expecting to hire over the next three months rose to 43.9 per cent from 40.6 per cent in May, signalling some employers remain confident.

Divergent outlook across industries

Manufacturing precision engineering firms were most optimistic, buoyed by strong global AI-related investment, according to the Economic Development Board. Petrochemicals and petroleum segments were most pessimistic due to Middle East supply disruptions. Services companies expect more favourable conditions in the second half of 2026. Singapore’s economy grew 5.7 per cent in the second quarter, outpacing the government’s full-year forecast. The regional surveillance organisation AMRO forecasts 4.8 per cent growth for 2026, down from 5 per cent in 2025.

Labour cost concerns persist despite mixed signals

More than half of Singapore companies surveyed in April expressed concern about rising labour costs. The Monetary Authority of Singapore warned that labour demand could soften this year due to increasing uncertainties. The retrenchment spike, though below pandemic levels of 5,640 to 9,120 workers per quarter, signals that some employers are already adjusting workforce size in response to external pressures. Final second-quarter labour figures will be released in September.

Final Thoughts

Singapore’s labour market is bifurcated: export-facing sectors are cutting staff amid global headwinds, while domestic and public services continue hiring. With unemployment stable at 2 per cent but retrenchments at a five-year high, workers in restructuring industries face elevated risk even as overall job growth persists.

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