More growth but fewer workers needed? Countries grapple with the risk of 'jobless growth' amid AI boom
What happens when an economy keeps getting richer, but no longer needs as many new workers to grow? As AI reshapes how companies operate and where economic value is created, Singapore may need to rethink the relationship between growth, jobs and prosperity, experts say.
As economies become increasingly prosperous, a growing concern emerges: the possibility of "jobless growth" – a scenario where economic expansion fails to generate a proportional increase in employment. In Singapore, this conundrum is particularly pertinent, given the country's optimistic GDP growth forecasts and its rapid adoption of artificial intelligence (AI) technologies.
Experts warn that while AI has been driving economic growth through corporate investments without requiring additional manpower, this could lead to a paradoxical situation where the economy expands but job opportunities stagnate. The Ministry of Trade and Industry (MTI) recently upgraded its economic growth forecast for Singapore to 4.5% to 5.5%, up from an earlier estimate of 2% to 4%. This improved outlook is supported by an acceleration in global AI-related capital expenditure.
However, the situation has not been without its challenges. Retrenchments in the second quarter of 2026 rose to 4,620, their highest level since 2020, while resident employment growth slowed to 2,200 from 5,400 in the previous quarter. The Bank of England and the International Monetary Fund (IMF) have similarly highlighted the risks of jobless growth, citing concerns over the shrinking pool of "starter jobs" for young people and the potential for AI to disrupt employment patterns.
Prime Minister Lawrence Wong has acknowledged these concerns, stating that Singapore will not tolerate jobless growth and will work to ensure that economic gains translate into good jobs and better wages. Business leaders and labor economists agree that while jobless growth is a risk, it is not inevitable. They argue that a broad-based labor market slump has not yet occurred locally or globally, and that companies are adapting by redesigning jobs, creating new AI-related roles, and redeploying workers to new positions.
Nevertheless, the specter of jobless growth remains a concern, especially given Singapore's long-standing struggle with a tight labor market and an aging population. Experts emphasize that while AI can enhance productivity and create new value, it can also lead to a concentration of wealth and opportunities among highly skilled workers, leaving others behind.
As such, policymakers must remain vigilant and proactive in addressing the potential ramifications of jobless growth to ensure inclusive and sustainable economic development.
Written by urgent.news from Channel News Asia's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
