Singapore firms more selective in hiring as Iran war adds to cost pressures

[SINGAPORE] Early signs of more restrained hiring are emerging among firms in Singapore as cost pressures mount amid the ongoing Iran war, although the shift has yet to show up in official labour market data.

Recruiters and hiring platforms told The Business Times that while hiring activity remains broadly steady for now, some companies are beginning to take a more measured approach.

Kirsty Poltock, country manager of Robert Walters Singapore, said though hiring has not stopped, “geopolitical developments are contributing to a degree of hesitation, prompting businesses to prioritise efficiency and cost discipline”.

Taken together with other ongoing cost pressures – particularly around wages and operating expenses – Robert Walters has seen a “clear shift towards more prudent and strategic hiring” in recent weeks.

“Specifically, employers are prioritising candidates who can add immediate value or bring highly specialised skills,” said Poltock.

This comes amid an already cautious outlook from the Ministry of Manpower (MOM), based on its latest labour market and job vacancies reports released on Friday (Mar 20) which largely reflect conditions in 2025.

Commenting on the reports’ findings, Manpower Minister Tan See Leng said the data showed Singapore has a tight labour market that is still growing.

Looking ahead, MOM said that firms are expected to remain cautious, with 43.3 per cent indicating in December that they planned to hire in the next three months, while polls conducted in January pointed to a pick-up in hiring expectations, suggesting a “cautiously positive outlook for labour demand”.

However, Dr Tan also warned that the evolving conflict in the Middle East, which began on Feb 28, is expected to put pressure on electricity prices and business costs, with knock-on effects on economies including Singapore.

On Mar 18, Iran inflicted extensive damage on Qatar’s Ras Laffan liquefied natural gas (LNG) hub, the world’s largest LNG export facility, leading to a spike in global gas prices. The attack was in retaliation against US strikes on Iran’s key oil export hub Kharg Island.

BT previously reported that about 42.5 per cent of Singapore’s LNG imports in 2025 originated from Qatar.

Early signs?

While Poltock said it is “too soon to truly evaluate” how the Iran war’s broader economic fallout will affect Singapore’s labour market, she noted that early signs of more restrained hiring are emerging in sectors exposed to external demand and cost volatility, such as manufacturing and parts of the technology sector.

“Export-oriented businesses in particular are being more measured,” she said.

In contrast, she said sectors such as healthcare and certain areas of financial services remain relatively stable, especially where hiring is tied to essential or regulatory functions.

Beyond trade-exposed sectors, rising costs are also beginning to weigh on some domestically focused businesses.

Andrew Tan, co-owner of furniture store Atomi, said operating costs have risen by about 20 per cent since the start of the conflict, driven largely by higher shipping and logistics expenses for bulky items.

The cost pressures have dampened plans to expand his firm’s headcount in Singapore beyond its lean five-man team.

“We are facing more than a double whammy,” he said, noting that rising wages, as well as higher fuel and energy costs, are driving up expenses across the business.

Tan added that softer consumer spending locally – particularly on discretionary items – has also weighed on the business, prompting the firm to accelerate its overseas expansion to tap new revenue streams with its existing manpower.

“Avoiding retrenchments is already a significant achievement,” he said, as a disciplined approach to managing resources since the Covid-19 pandemic has helped preserve jobs.

OCBC’s chief economist Selena Ling said retrenchments are generally a firm’s last resort.

“Usually the first line of defence is cost containment measures including slower hiring,” she said, adding that firms also tend to become more cautious when rising costs cannot be passed on to consumers.

“At this juncture, the labour market indicators do not immediately scream for a knee-jerk intervention – unemployment rates remain low and stable, ditto for retrenchments. And while hiring and wage decisions have turned slightly more cautious, they are still at non-recessionary levels.”