Singapore’s labour market maintained stability in the fourth quarter of 2024, according to the latest Labour Market Pressure Index (LMPI) from UOB Global Economics and Markets Research. The index, which utilises methodologies such as equally-weighted Z-score and Principal Component Analysis, indicates a significant easing of labour market tightness since its peak in the second quarter of 2022.
The LMPI, incorporating ten distinct labour market indicators, suggests that the job market remains robust. Notably, the job vacancies to unemployed persons ratio increased to 1.64 in Q4 2024 from 1.32 in Q3 2024, whilst the overall unemployment rate stayed low at 2.0% as of January 2025. Despite a rise in redundancies to 3,680 in Q4 2024, these figures align with historical norms, reflecting a stable employment environment.
The LMPI also highlights a positive correlation with the Monetary Authority of Singapore’s year-on-year core and services Consumer Price Index readings. This relationship underscores the potential for a tight labour market to exert upward pressure on consumer prices due to strong wage pressures.
Looking ahead, UOB anticipates the labour market will remain resilient in the first half of 2025. However, firms may exercise caution in hiring, particularly in trade-related sectors, due to escalating trade tensions and tariffs. The government’s focus on upskilling and reskilling initiatives in recent budgets is expected to enhance labour productivity, helping businesses manage cost pressures.
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