MOM published the Labour Market Report for Q1 2026 on 15 June 2026. The headline numbers — 9,400 jobs added, unemployment holding at 2.0% overall — suggest a labour market that remains broadly stable. But the underlying data tells a more nuanced story: employment growth has slowed, retrenchments have edged up for the second consecutive quarter, degree-holder retrenchments are at their highest recorded rate, and job vacancies have eased from their 2025 peak.
For HR managers and business leaders making foreign hiring decisions — EP applications, S Pass quotas, COMPASS strategy — these labour market indicators are not just macroeconomic background. They directly influence how MOM applies its Fair Consideration Framework, how tightly it scrutinises C4 (local PMET hiring) scores under COMPASS, and where sector-level approval rates are likely to shift over the next two quarters.
This article synthesises the Q1 2026 data and draws out the practical implications for employers managing a foreign and local workforce in Singapore as at July 2026.
Singapore Labour Market Q1 2026: The Key Data Points
Total Employment: Growth Continues but Slows
Total employment grew by 9,400 in Q1 2026, marking the 18th consecutive quarter of employment growth since Q4 2021. However, the pace slowed materially from Q4 2025, when 17,700 jobs were added. Resident employment growth was 5,400, up from 3,100 in Q4 2025 — suggesting that the slowdown in headline growth reflects a fall in non-resident hiring rather than a deterioration in local employment conditions.
For EP and S Pass strategy, the resident employment growth figure is the more relevant number. MOM’s COMPASS framework rewards employers who hire locals alongside foreign professionals. A rising resident employment figure is a positive macroeconomic signal, but it does not diminish MOM’s scrutiny of individual firms’ local PMET hiring records.
Unemployment: Low but Resident Rate Ticks Up
In March 2026, the overall unemployment rate stood at 2.0%, the resident unemployment rate at 2.9%, and the citizen unemployment rate at 3.1%. The resident long-term unemployment rate was 0.9%. These rates remain low by historical standards, but the citizen unemployment rate of 3.1% is a figure MOM watches closely when calibrating the Fair Consideration Framework.
Higher citizen unemployment — even at relatively modest absolute levels — provides MOM with a policy rationale to apply closer scrutiny to employers whose EP applications do not demonstrate active efforts to hire qualified Singaporeans and PRs first. Employers in sectors where citizen unemployment has risen above the overall average should expect more detailed scrutiny of their COMPASS C4 scores at renewal.
Retrenchments: Rising, and Concentrated at the Top
Retrenchments rose from 3,690 in Q4 2025 to 3,830 in Q1 2026. The increase was driven primarily by manufacturing, financial services, and professional services. Among resident workers, PMETs (Professionals, Managers, Executives and Technicians) recorded the highest retrenchment incidence across occupational groups at 2.6 per 1,000 resident employees.
The most striking data point is the degree-holder retrenchment rate: 3.1 per 1,000 resident employees, up from 2.6 in Q4 2025, and the highest rate recorded for this qualification group. This suggests that the restructuring activity driving retrenchments is concentrated in higher-skill, higher-salary roles — precisely the roles for which Employment Passes are issued.
From a compliance perspective, rising PMET retrenchments increase the likelihood that MOM will receive more complaints under the Fair Consideration Framework about firms that hire foreign professionals while retrenching local PMETs. Employers should ensure that their retrenchment procedures follow MOM’s tripartite guidelines, particularly the requirement to notify MOM of any retrenchment exercise involving five or more employees per MOM’s retrenchment notification guidelines.
Job Vacancies: Easing but Still Above Unemployed
Job vacancies fell from 77,700 in December 2025 to 73,300 in March 2026. The job vacancy rate eased from 3.1% to 2.9%. Critically, vacancies still exceeded the number of unemployed persons: the ratio of job vacancies to unemployed persons fell from 1.58 to 1.46, but remains above 1.0 — meaning there are still more open jobs than people actively looking for work.
A vacancy-to-unemployed ratio above 1.0 is the structural condition that underpins MOM’s willingness to allow foreign hiring under the EP and S Pass frameworks. When the ratio falls below 1.0, MOM historically becomes significantly more restrictive. At 1.46, the current ratio still provides an employer-friendly backdrop for pass applications, but the year-on-year downward trend from the highs of 2024-2025 signals a tightening environment.
What the Data Means for EP Applications and COMPASS Strategy
The Q1 2026 labour market data has specific implications for how employers should approach EP applications and COMPASS scoring in the second half of 2026 and into 2027. For a full explanation of the COMPASS framework, see our Complete Singapore Employment Pass Guide 2026.
C4 (Local PMET Hiring): Expect Greater Scrutiny
COMPASS’s C4 criterion evaluates whether the employer’s local PMET share is at or above the median for their sector. With citizen unemployment rising and PMET retrenchments concentrated in sectors like financial services and professional services, MOM is likely to apply more active scrutiny to EP applications from firms in those sectors whose C4 score reflects below-median local PMET hiring.
Employers who score poorly on C4 — typically below-median local PMET share — should take proactive steps: document genuine local job posting efforts on MyCareersFuture, retain records of why local candidates were not shortlisted, and consider whether workforce planning can improve the local PMET ratio before the next EP application or renewal cycle.
Financial Services and Professional Services: Higher Sector Risk
The retrenchment data indicates that financial services and professional services are the sectors where restructuring is most active in 2026. These are also sectors with some of the highest EP concentrations. Employers in these sectors should treat the Q1 2026 data as a signal to review their COMPASS positioning at the next renewal cycle. For financial services EP applications, the qualifying salary threshold is already higher (SGD 6,200 per month for new applicants as at July 2026), and the COMPASS C1 benchmark for financial services roles is commensurately demanding.
For details on the updated COMPASS benchmarks in force from 1 July 2026, see our EP COMPASS Renewal Audit July 2026 guide.
S Pass Quota Implications
The S Pass Dependency Ratio Ceiling is set at the firm level and tied to the employer’s local headcount. With resident employment growing at a modest 5,400 per quarter, the rate of organic quota expansion for most employers is limited. Employers who have been at or near their S Pass quota ceiling should factor in the slower growth rate when projecting available S Pass slots for H2 2026 and 2027.
Note also that the S Pass qualifying salary increased to SGD 3,600 per month for most sectors (SGD 4,000 for financial services) from 1 July 2026. The full details are in our Complete Singapore S Pass Guide 2026.
What the Data Means for Workforce Planning and Local Hiring
The broader signal from Q1 2026 is that Singapore’s labour market is transitioning from a post-COVID hiring surge into a more normalised, somewhat more cautious phase. Employers should not read the slowdown in total employment growth as a sign that hiring is getting easier — the vacancy-to-unemployed ratio of 1.46 still reflects a market where qualified candidates are scarce in most sectors.
From a strategic perspective, employers who use the current window to build robust local PMET pipelines — through SWDA’s Career Conversion Programmes, SWDA’s Workforce Development Grant, or direct campus hiring — are positioning themselves well for a period where MOM’s Fair Consideration Framework scrutiny is likely to intensify. The cost of local PMET development is also partially offset by SWDA’s WDG funding of up to 70% of approved costs.
For a full model of what foreign hiring actually costs — including EP fees, salary, relocation, and levies — see our guide to the true cost of hiring a foreigner in Singapore 2026.
Sector Hiring Outlook: Where the Q1 2026 Data Points
Looking across sectors, the Q1 2026 data suggests the following broad hiring environment for the remainder of 2026:
- Technology: Vacancy rates remain elevated in technology roles, and COMPASS’s C5 skill bonus for candidates in shortage occupations continues to provide an EP approval boost for well-qualified tech professionals. MOM’s list of experienced tech professionals in shortage supports EP applications where the candidate’s skill set is documented.
- Financial Services: Rising retrenchments and the higher qualifying salary threshold (SGD 6,200/month) make financial services EPs the most scrutinised category. Firms should ensure COMPASS C4 scores are above the sector median before applying.
- Professional Services: Similarly affected by restructuring. Employers should document local hiring efforts carefully and be prepared for longer EP processing times if sector unemployment continues to rise.
- F&B and Retail: These sectors are not significantly affected by PMET retrenchment trends. S Pass quota management remains the primary constraint. Work Permit levy rates and Dependency Ratio Ceilings are the key compliance variables.
- Healthcare and Education: Vacancy rates remain high; EP approvals in clinical and specialist education roles continue to track above average.
Conclusion
The Q1 2026 Labour Market Report confirms that Singapore’s employment market remains healthy but is clearly past its post-COVID peak. Employment growth has slowed, PMET retrenchments have risen, and job vacancies are gradually easing. For employers managing foreign hiring under the EP and S Pass frameworks, the practical implication is greater COMPASS scrutiny — particularly on C4 local PMET hiring scores — and a more challenging Fair Consideration Framework environment, especially in financial services and professional services.
If your organisation is navigating EP applications, S Pass quotas, or COMPASS positioning in this environment, Little Big Employment Agency — MOM Licence 19C9790 — provides expert guidance on pass strategy, application preparation, and COMPASS analysis. For corporate incorporation and expansion support in Singapore, contact Raffles Corporate Services.
— The Editorial Team, Little Big Employment Agency