SINGAPORE: Singapore’s labour market is expected to remain tight as demand for talent continues to surge alongside an improving economic climate.
In a recent analysis, economists at Nomura highlighted a significant uptick in their Labour Market Conditions Indicator (LMCI) for Singapore in the first quarter of 2024.
This recovery follows a period of easing from its peak over the last seven quarters.
According to Nomura, the current labour market dynamics reflect robust wage growth, with average monthly earnings now exceeding pre-pandemic levels.
This wage growth is a testament to the strong demand for labour across various sectors, driven by the country’s ongoing economic recovery.
Data from the Ministry of Manpower (MOM) supports this outlook, showing a notable increase in the share of companies planning to hire more workers in the upcoming quarter.
This proportion rose to 50.7% in the first quarter of 2024, up from 47.7% in the previous quarter, indicating heightened business optimism and expansion plans.
Despite a slight decrease in the job vacancies-to-unemployment ratio—from 1.7% to 1.6%—the ratio remains above 1%, suggesting that job openings still significantly outnumber job seekers.
The total number of job vacancies continued to climb for the second consecutive quarter, further underscoring the strong demand for talent.
In addition to rising vacancies, the retrenchment rate has shown a positive trend, declining from 3,460 in the previous quarter to 3,030 in Q1 2024.
This reduction in job losses indicates a stabilizing job market, with fewer companies resorting to layoffs as economic conditions improve.
Employment figures across Singapore also showed growth, with the total number of employed individuals increasing by 4,700 in the first quarter.
However, despite these positive indicators, the unemployment rate edged up slightly to 2.1% as of March 2024, reflecting a gradual adjustment in the labour market.
Nomura analysts project that given the strong labour market conditions and positive economic outlook, underlying wage pressures are likely to persist.
This trend supports their longstanding view that core inflation in Singapore will remain elevated in the near term, driven by sustained wage growth and labour demand.