Singapore’s labour market faces uncertainty as US tariffs loom, but easing pressures and falling rates offer hope

SINGAPORE: The labour market of Singapore is expected to remain resilient through the first half of 2025, although some sectors may face hiring challenges, particularly those linked to trade.

According to UOB’s latest commentary published by the Singapore Business Review, uncertainties around US tariff policies could slow hiring in industries like wholesale trade, transportation, storage, and manufacturing.

Despite these challenges, UOB suggests that the overall labour market could still benefit from declining global policy rates.

These lower rates are expected to encourage investment and consumption, which would help sustain demand for workers in other sectors.

A key indicator of the labour market’s health, the 3Q24 Labor Market Pressure Index (LMPI), shows a notable easing in labour tightness since mid-2022.

In 3Q24, conditions stabilized, with the job vacancies-to-unemployed ratio dropping to 1.39, down from a high of 2.54 in 2Q22.

While this marks a decrease, the ratio remains above 1, signalling that job opportunities continue to outnumber job seekers.

UOB also pointed out that the LMPI’s trends are closely linked to inflationary pressures. The bank noted that a tighter labour market could put upward pressure on consumer prices, as reflected in the Monetary Authority of Singapore’s core and services CPI.

While certain sectors may face headwinds, Singapore’s labour market is likely to remain stable, supported by broader economic factors like global policy rates and ongoing demand for workers in many industries.