SINGAPORE: Singapore’s labour market is set to thrive in 2025, particularly in the manufacturing and services sectors, according to a new report by RHB featured by the Singapore Business Review.
The analysis highlights promising figures from the third quarter of 2024, indicating a steady improvement in labour conditions, which bodes well for increased wages and disposable income in the upcoming year.
Employment surged, joblessness dipped
The Ministry of Manpower has revealed that employment surged by 24,100 positions in the third quarter of 2024, while the unemployment rate dipped to an impressive 1.8%—among the lowest levels recorded in the nation’s history.
This robust hiring trend is expected to continue in the fourth quarter, especially in the services industry, fuelled by the festive season and positive growth projections for 2025.
Despite a generally optimistic outlook, RHB cautioned that geopolitical tensions, protectionist measures, and unforeseen global events could pose risks to this trajectory.
They noted that while recent polling may suggest a dip in hiring demand, this could be attributed to temporary disruptions in global trade rather than a fundamental weakening of the labour market.
Wages, although structurally stable, are likely to see upward trends due to Singapore’s relatively tight labour landscape.
Soaring wages or economic headwinds?
In recent months, the demand for skilled labour has surged across key sectors such as manufacturing, technology, and healthcare.
For instance, according to Technology Magazine, the semiconductor industry has seen an unprecedented boom, fuelled by a global push for electronic components essential for artificial intelligence (AI) and Internet of Things (IoT) technologies.
This heightened demand is expected to drive companies to offer competitive salaries in a bid to attract and retain top talent. With unemployment rates hovering around historic lows—1.8% as reported by the Ministry of Manpower in Q3 2024—workers are in a stronger position to negotiate better pay, suggesting a positive outlook for wage growth.
However, geopolitical tensions, particularly in trade, could pose significant risks to Singapore’s economy.
For example, the ongoing U.S.-China trade disputes have raised concerns about potential supply chain disruptions that could affect local businesses.
Additionally, inflationary pressures could erode any wage gains, as rising costs of living become a pressing issue for many households.
Moreover, protectionist policies globally could limit Singapore’s ability to engage in free trade, which is vital for an economy so dependent on exports.
A report by the World Bank in early 2024 highlighted that such policies could lead to slower economic growth in the region, raising further questions about the sustainability of wage increases.
In this complex landscape, while the job market’s strength presents a promising scenario for wage growth, the potential economic headwinds cannot be ignored.
The balance between these opposing forces will ultimately determine whether Singaporeans can look forward to higher wages in 2025 or face challenges that may dampen their economic prospects.
As Singapore gears up for 2025, the combination of a resilient job market and favourable economic indicators signals a promising future for both employers and employees alike. Likewise, as businesses and policymakers strategize for the future, the coming year will be crucial in shaping the trajectory of both wages and the broader economy.