When growth sectors shed workers, it’s time to mind the gap

[SINGAPORE] Retrenchments are at their highest since the Covid-19 pandemic, even as the number of vacancies shrank in the quarter, recent Ministry of Manpower (MOM) figures show.

Besides a potential labour market slowdown, the statistics could herald a more structural problem.

What is striking is that the industries facing job pullbacks overlap significantly with the sectors that drove Singapore’s stellar second-quarter gross domestic product growth.

Given the disturbing implications of this trend, it is all the more imperative to ensure that workers are not being left behind, and that economic benefits are accruing fairly to them.

Out of place

Industries handing out sheaves of pink slips from April to June included manufacturing, which grew 12.5 per cent, and wholesale trade, which expanded 8.3 per cent.

Retrenchments were also recorded in finance and insurance, which expanded 6.2 per cent, and information and communications services, which grew 5 per cent.

Business reorganisation and restructuring was the main reason cited for layoffs.

“Growth and restructuring can happen in the same sector at the same time,” Lewis Garrad, rewards and workplace leader at professional services company Marsh, told The Business Times.

Calling the retrenchments “targeted rather than broad-based”, he suggested that the affected industries may be largely shifting more staff to new, higher-value roles.

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But are such openings materialising, and in enough quantity to absorb the freshly jobless?

The number of vacancies decreased to 68,600 in Q2, from 73,300 as at end-March. Openings are now sharply lower than the 76,200 reported in mid-2025.

Worryingly, the largest quarter-on-quarter declines were in some of the same growth sectors that also ramped up layoffs. The number of unfilled positions shrank 22.4 per cent in financial services and 17 per cent in information and communications.

AI-driven layoffs?

For at least one watcher, a key cause of Singapore’s softening labour market is clear.

“The AI boom so far is disrupting services employment, destroying more jobs than creating new jobs,” Maybank economist Chua Hak Bin said in an e-mail to BT, adding that “the adoption of AI could also lead to wider displacement of workers”.

But whether business disruption caused by AI is truly behind the changes in the job landscape remains murky. That lack of clear insight could constitute its own problem too.

“We have not yet established how much AI is contributing to this rise in retrenchments,” said Ang Boon Heng, director of the manpower research and statistics department at MOM, on Monday (Sep 21). “We are still studying that.”

Given the rapidly maturing nature of AI – which has already advanced past generative AI and into the realm of the agentic – it is becoming all the more urgent to understand the extent to which society and the economy have been altered by this new technology.

While research often requires some benefit of hindsight, accuracy cannot come at the expense of too long a wait.

More information is needed quickly, so policymakers can respond appropriately if business adoption of AI indeed poses a major risk to jobs.

Bosses, step up

So far, Singapore’s strategy has emphasised reskilling workers. This is a sensible approach, based on the reasoning that corporations will want employees who can ably wield AI tools.

Unfortunately, this assumption may be tested by the fact that the industries that are doing well are still letting staff go.

Either companies have found a way to thrive with less labour, or they are placing a bet on bots that may not pan out. Both scenarios bode ill in different ways.

If the divergence of capital and labour is left unaddressed, Singapore’s much-vaunted tripartite model could be at stake, as the relationship between employers and workers frays.

Under the prevailing social compact, that can never be allowed to happen.

Chatter around the spectre of a K-shaped economy has largely focused on the gap between growth sectors – such as tech-related industries – and those that are lagging behind.

But the possibility that a split between business outcomes and employment conditions is emerging among economic outperformers brings up a fresh red flag.

The government affirmed in May that the Republic will pursue “an AI transition with no jobless growth”. The challenge of fulfilling this promise may be here sooner than expected.