MOM weighs ‘action’ against firms that can afford retrenchment benefits but refuse to pay: Jasmin Lau

SINGAPORE – The Ministry of Manpower (MOM) is weighing possible “administrative action” against employers that are able but unwilling to pay retrenchment benefits despite repeated engagements and warnings, Acting Manpower Minister Jasmin Lau told Parliament on Oct 6.

She was responding to a raft of questions on rising retrenchments and falling re-employment rates from over 10 MPs, following official data that showed layoffs in Singapore reached a post-pandemic high in the second quarter of 2026.

Retrenchment benefits are not mandated by law in Singapore. Employers are guided by a tripartite advisory, which sets the prevailing norm for retrenchment payouts at two weeks to one month’s salary per year of service.

Based on mandatory retrenchment notifications submitted to MOM in 2025, about 88 per cent of employers paid retrenchment benefits to their workers.

Of those who did not, only about a fifth cited financial difficulties, Lau said. The rest pointed to other reasons including the lack of a legal obligation to do so, or said they had provided alternative support, such as keeping employees on the payroll longer.

Close to 80% of retrenched workers who did not receive retrenchment benefits in 2025 were from firms with less than 200 employees, Lau added.

MOM has faced growing queries from MPs regarding retrenchment trends in recent parliamentary sittings. In August, Minister of State for Manpower Dinesh Vasu Dash said trade unions and employers would be consulted on retrenchment benefits before any decision on writing it into law.

Lau said tripartite partners are also weighing bringing forward the mandatory retrenchment notification window so that affected staff can receive job support earlier.

Under current rules, firms with 10 or more employees have up to five working days after notifying staff to inform MOM.

She said the ministry has received feedback from the Employment and Employability Institute (e2i) about the challenge in reaching retrenched workers directly when MOM is notified after they have left the company, as contact details may not be available.

“We are exploring how we can address this while protecting the privacy and personal preferences of retrenched workers,” she said, in response to a parliamentary question from MP Patrick Tay (Pioneer SMC).

Lau added that these measures are being weighed as part of an ongoing review of the Employment Act. The tripartite workgroup tasked with the review, which began in 2025, has said it expects to submit recommendations to the government by the second half of 2026.

Several MPs including He Ting Ru (Sengkang GRC) and Shawn Loh (Jalan Besar GRC) also asked for more details about the profiles of retrenched workers.

In the second quarter, 4,620 workers were retrenched, up from 3,830 in the first quarter. More than three quarters of these workers were laid off due to business reorganisation or restructuring, Lau said.

Singapore residents accounted for about three quarters of retrenchments, as they are disproportionately represented in professionals, managers, executives and technicians (PMET) roles, which are more impacted by restructuring, she added.

Among PMETs, the likelihood of retrenchment was similar for both residents and non-residents, at 3.2 in every 1,000 employees in the second quarter of 2026, she said.

More than half of retrenched residents are in their 40s and 50s, she said. Degree-holders account for a growing proportion of retrenched residents, with their share rising from 51% in 2021 to 66.4% in 2025.

MPs also raised concerns over slowing re-employment rates, after MOM data showed that the proportion of retrenched workers securing a new job within six months dropped from 60.7 per cent in the first quarter to 54.9 per cent in the second quarter.

The acting minister said that while seasonal hiring patterns partly explained the decline, the re-entry rate into employment was lower than in previous years and showed a “broader downtrend”.

PMETs continued to face the lowest re-entry rates, with 54.1% landing a new job within six months after layoffs according to MOM data.

About seven in 10 PMET residents were employed again within 12 months, and about eight in 10 within 24 months, Lau added. These re-entry rates were lower for older retrenched PMETs.

For those who re-entered the workforce, about six in 10 earned more than they did before they were retrenched, she said. But those who earned less saw a median wage reduction of around 25%.

The sector with the lowest re-entry rate for retrenched residents six months after layoffs varied by quarter, she said, with financial services recording the lowest rate over the last 14 quarters, often followed by wholesale trade.

The acting minister said that MOM, the labour movement and employers’ federation were looking at how to support workers who face longer transitions back into employment, including older workers and those in sectors undergoing significant restructuring. This was being done through channels such as a Tripartite Workgroup on Senior Employment announced in 2025.

As more firms in Singapore use artificial intelligence (AI) to boost productivity, concerns over job security have surfaced.

Sengkang GRC’s He asked about the proportion of retrenchments due to cyclical restructuring rather than AI adoption and if MOM would start tracking AI-attributed retrenchments as a distinct category.

Lau said it was “not clear at present” if the second quarter retrenchments were driven by AI adoption, as it is difficult to isolate the specific impact of AI adoption from broader business transformation and reorganisation.

She said that according to MOM’s surveys, only a small minority of firms adopting AI have reduced headcounts, while more are creating new roles or redesigning jobs.

“We will continue to refine our surveys and market sensing mechanisms to better understand the impact of AI on jobs,” she said.