Commentary: What happens after retrenchment may matter more than the headline number

Singapore recorded 4,620 retrenchments in the second quarter of 2026, the highest quarterly total since the fourth quarter of 2020. However, the number of retrenchments is just one indicator of the health of Singapore’s labour market. Despite the layoffs, the labour market remains relatively strong, with employment growth, low unemployment, and ample job vacancies.

The crucial aspect to examine is the situation for those who lose their jobs. This includes the speed of their return to work and the nature of the jobs they end up with. The rate of re-entry into employment is an important metric. In the second quarter, 54.9% of retrenched residents returned to employment within six months, a slight decrease from 60.7% in the first quarter.

However, among those retrenched in the second quarter of 2025, 57.4% had returned to employment within six months, and this figure rose to 69.8% after a year. These numbers suggest that many displaced workers eventually find a job, but the process may take time.

The timing and sector of retrenchments matter. During the second quarter, most job losses occurred in manufacturing, information and communications, and financial services, sectors where professional workers are concentrated. Meanwhile, most employment growth came from non-residents, mainly Work Permit holders in construction and manufacturing. This mismatch between the types of jobs lost and the types of jobs created could make it more difficult for retrenched professionals to find suitable employment.

Moreover, the economic loss from retrenchments may not be fully recovered even if a job is secured. For example, a professional earning the median S$8,400 a month might see their salary drop to S$6,000 after retrenchment, which is closer to the earnings of a less experienced worker. This drop in income can significantly impact workers' financial well-being.

Singapore offers various support measures for workers undergoing career transitions, such as career coaching, job matching, career conversion programmes, and reskilling support. These initiatives can help workers identify suitable job vacancies and acquire the necessary skills for new roles or sectors. Employers also play a role by recognising the transferability of skills and experience across different industries.

While a quarter of retrenched workers experiencing a slower re-entry is not enough to conclude a persistent decline in Singapore’s labour market, it is still a concern. The next few quarters will provide more insight into whether the recent slowdown in re-employment is temporary or if some workers are facing prolonged challenges. Equally important is the impact on workers' earnings after re-employment. Both re-employment rates and changes in earnings are crucial indicators of the effectiveness of workers' transition.