Retrenchments skyrocketed in 2023; more than double from 2022—MOM report

SINGAPORE: While the number of retrenchments declined in Singapore in the last quarter of 2023, they more than doubled compared to 2022, according to advance labour market estimates from the Manpower Ministry (MOM) on Wednesday (Jan 31).

There were 14,320 retrenchments in 2023 and only 6,440 the year before. “The number of retrenchments rose in 2023 after a record-low in 2022, largely a result of re-organisation or restructuring within firms,” said MOM in its report.

The ministry added that this is partly due to the impact of global economic headwinds on the wholesale Trade, IT services, and electronics manufacturing sectors.

And while there had been 4,110 retrenchments in the third quarter of 2023 due to a surge in the wholesale trade sector, the number fell to 3,200 in the last quarter of the year.

This quarter saw an increase in retrenchments in electronics manufacturing, but numbers either declined or were broadly stable in the other sectors.

“For the whole of 2023, employment grew for both residents and non-residents, but the pace of growth moderated in each successive quarter amidst weaker economic conditions.

However, the labour market remained tight even with labour demand cooling. Consequently, unemployment rates remained stable and low. The number of retrenchments rose in 2023 after a record-low in 2022, largely a result of re-organisation or restructuring within firms,” MOM said.

The ministry noted that while total employment (excluding migrant domestic workers) has shown growth for nine consecutive quarters, growth for the fourth quarter of 2023 had moderated significantly compared to the previous quarter.

Nevertheless, MOM said this was not unexpected due to weaker hiring expectations and declining job vacancies from previous quarters, which indicates a cooling labour demand.

Growth in resident employment was mainly in the health and social services as well as public administration and education sectors. Because of seasonal hiring, there was a surge in the retail trade and food and beverage services.

“After the sharp, post-pandemic rebound in 2022, total employment growth for the full year of 2023 was moderate amidst weaker economic conditions. The more muted pace of growth was seen for both residents and non-residents,” MOM added.

On a positive note, MOM wrote that the proportion of employers that indicated an intention to hire in the next three months increased from 42.8 per cent in the previous quarter to 47.7 per cent in the last quarter of 2023.

Similarly, the proportion of companies who intend to raise salaries has increased from 18 per cent to 32.6 per cent.

However, “as downside risks in the global economy remain, business reorganisation or restructuring will continue and may lead to further retrenchments,” the ministry added.

MOM’s Labour Market Report Fourth Quarter 2023 is due for release in mid-March 2024. /TISG

Read also: Retrenchments doubled in Q3, highest since pandemic Q4 period in 2020