Singapore’s tight labour market endures amid rising skills gaps and PMET restructuring

Singapore’s labour market remained tight in 2025, with strong demand for talent continuing into early 2026—even as signs of structural shifts and cautious employer sentiment emerge.

According to the Ministry of Manpower’s (MOM) latest Job Vacancies and Labour Market reports, job openings continued to outnumber jobseekers, with a vacancy-to-unemployed ratio of 1.58 in December 2025. Total vacancies reached 77,700 in the fourth quarter, underscoring sustained labour demand despite a volatile global backdrop.

A key trend shaping the market is the rise of newly created roles. Nearly half (49.3%) of all vacancies in 2025 were new positions, up from 45.7% the previous year. This points to business expansion—particularly in growth sectors—rather than replacement hiring as the primary driver of demand. Information and communications, professional services, and financial services led the way, with the highest shares of new roles.

At the same time, structural mismatches persist. MOM noted that while the labour market remains tight, some jobseekers face difficulties securing roles aligned with their qualifications and experience. This reflects the growing impact of digitalisation, which is reshaping demand towards specialised skills in areas such as software development, data science, and systems programming.

This shift is particularly evident in hiring challenges for professionals, managers, executives, and technicians (PMETs). While overall hiring difficulties have eased—with long-term unfilled vacancies falling to a decade-low of 17.1%—the share of PMET roles left vacant for at least six months has increased. Employers cited a lack of specialised skills and insufficient work experience as the primary barriers to filling these roles.

Despite ongoing concerns around AI, MOM found no conclusive evidence of widespread job displacement among PMETs. Instead, the data points to “ongoing restructuring and skills transition”. Notably, sectors such as financial services and information and communications saw both higher retrenchments and higher job vacancies, suggesting that while some roles are being phased out, new ones are simultaneously being created.

READ MORE: Singapore hiring sentiment rises in Q2 2026 amid AI adoption and skills demand

Indeed, PMET retrenchments rose in 2025, with the incidence increasing to 10.1 per 1,000 employees. However, overall retrenchment levels remained within non-recessionary norms, and re-entry rates improved, with 57.4% of retrenched residents securing employment within six months.

Encouragingly, employers are increasingly shifting towards skills-based hiring. For nearly 70% of vacancies, organisations reported better outcomes when prioritising skills over academic qualifications, resulting in faster hiring and improved job fit. This is reflected in the growing willingness to consider candidates with lower formal qualifications, expanding access to opportunities for mid-career employees and non-traditional talent pools.

Flexibility is also becoming a defining feature of the labour market. The share of roles that can be performed remotely rose significantly to 22.7% in 2025, supporting broader workforce participation, particularly among caregivers and individuals requiring flexible arrangements. At the same time, reliance on overseas hiring has declined, signalling a strong focus on local talent.

Looking ahead, hiring sentiment remains measured. Around 43.3% of organisations indicated plans to hire in early 2026, while a modest proportion expect wage increases. Although the overall outlook is cautiously positive, MOM highlighted ongoing global uncertainties—including geopolitical tensions and rising business costs—that may influence employer decisions, reported The Business Times.