Labour market could worsen further; government acting early to strengthen worker protection: Jasmin Lau

Singapore's labour market is undergoing structural changes, with retrenchments rising for five consecutive quarters, white-collar workers accounting for a growing share of those laid off, and re-employment taking longer. Acting Minister for Manpower Jasmin Lau said conditions could worsen further. The government will act pre-emptively to strengthen worker protection, including exploring mandatory retrenchment benefits and greater protection for white-collar employees as part of its review of the Employment Act.

In an interview with Lianhe Zaobao and The Straits Times last Friday (6 November) to mark her first 100 days in office, Lau, who is also Senior Minister of State for Digital Development and Information, said retrenchments had risen in the second quarter, but she did not see this as an isolated occurrence.

She said: “(retrenchment numbers) probably will stay around that level for some time.”

Retrenchments reached 4,620 in the second quarter, the highest since the fourth quarter of 2020 during COVID-19. Preliminary estimates put the third-quarter figure at 4,800, while the proportion of companies planning retrenchments also rose slightly. The profile of those retrenched has changed too. White-collar employees have consistently made up about 60% of the local workforce over the past decade, but their share of retrenchments has risen from 60% to 70% a decade ago to 90%.

Meanwhile, the proportion of retrenched workers who found another job within six months has fallen from 65% a decade ago to 55% now.

Lau said many white-collar workers hold highly specialised, well-paid jobs, making it harder to find equivalent roles after retrenchment. They often have to move into another sector and inevitably face pay cuts. This gives some pause when looking for work, prolonging the time it takes to find another job.

She also noted that while outward-oriented sectors such as financial services and advanced manufacturing offer growth opportunities, companies face international competition, and staff turnover and changes in job roles can be quite frequent. “So when they go into these sectors, the workers must also know there is a chance that the churn will happen, and therefore they must be prepared for the career transitions.”

Lau pledged that the government would not leave workers to face these challenges alone, nor would it merely remind them to prepare themselves mentally. Relevant policies and support schemes must take into account the reality that employees need time to retrain after leaving their previous jobs.

She also stressed that the authorities would not wait six months or a year for the situation to become clearer before responding. “A lot of our moves that now we want to put in place are anticipatory or so, knowing that (the labour market) could turn worse or it could soften further, let's do something to give our workers a bit more confidence about the years that are to come.”

One initiative to strengthen employee protection is the review of the Employment Act, undertaken jointly by the government, unions and employers. Lau said in the interview that the review was progressing well, with specific recommendations and the direction of reforms expected to be formally announced in early 2027. While she did not disclose specific amendments under consideration, she discussed retrenchment benefits, extending protection for white-collar employees and fostering more people-centred workplaces.

Lau revealed that the authorities were considering making it mandatory for employers to provide retrenchment benefits. However, they were inclined to use administrative measures, such as foreign worker quotas and conditions for government grants, to encourage companies to fulfil their responsibilities, rather than necessarily legislating.

She explained that making retrenchment benefits a statutory requirement could lead to lengthy litigation if companies in financial difficulty were unable to pay. Retrenched workers might still receive no compensation in the end, while companies might turn to hiring contract workers instead.

She also said the existing Employment Act contained many provisions protecting blue-collar employees. With white-collar workers making up a growing share of the local workforce, the authorities would study whether the Act's scope of protection could be expanded. “So hopefully, when our local workforce hears about the review, knowing that there is protection for them will make them feel a bit more assured.”

However, Lau stressed that the review must also take employers' needs into account, “making sure that the rules put in place are clear and don't overly restrict the way they manage their workforces.”

She also hopes the review will help foster a more inclusive workplace culture built on mutual trust, for example by exploring whether employees who are unwell could take sick leave without submitting a medical certificate.