Debate on how to protect workers will move from ensuring benefits to finding new jobs as retrenchments rise

SINGAPORE – The growing need to protect workers dominated question time in Parliament on Oct 6, as MPs increased scrutiny on Government efforts to cushion layoffs amid a spike in retrenchments.

In response, the authorities opened the door to more worker protections – signalling possible action against employers who are financially able to pay retrenchment benefits but do not.

The questions come against the backdrop of a larger political promise: Prime Minister Lawrence Wong’s pledges that there will be no jobless growth in Singapore, and that though the Government may not be able to protect every job – it will protect every worker.

But even as protections are debated, the next pressure point on this promise is emerging: getting retrenched workers and fresh grads into jobs.

Scrutiny on the adequacy of current employment legislation came from the ruling party’s MPs. Thirteen PAP MPs, including four labour MPs, filed questions on retrenchment for Oct 6 against one Workers’ Party MP.

This came after statistics in September showed retrenchments reached 4,620 in the second quarter of 2026 – the highest figure since the pandemic. The rate of retrenchment was 2.0 per 1,000, above the Manpower Ministry’s (MOM) non-recession norms of 1.5 to 1.7 per 1,000 employees.

The 15 questions filed, the most on retrenchments in this term of Government, asked for more safeguards, pointing to weaknesses in existing protections.

One is the lack of legally-mandated retrenchment benefits. PAP MPs suggested this may be insufficient – an argument which lawmakers from both parties have made in the past.

Labour MPs Yeo Wan Ling (Punggol GRC) and Melvin Yong (Radin Mas) asked to strengthen the tripartite advisory – the recommended practice by the Government, unions and employers, which is not legally binding.

Yeo asked what safeguards there are for workers in non-unionised companies to ensure that the advisory on retrenchments is meaningfully adhered to. Meanwhile Yong asked if MOM sees a case for strengthening the prevailing norms in the advisory, particularly for workers who are most vulnerable.

In response, Acting Manpower Minister Jasmin Lau said that the authorities are considering taking administrative action against employers in egregious cases, where an employer with the financial ability to pay refuses to.

This was a shift from the Government position in February that Singapore does not mandate benefits because an approach that provides business flexibility while protecting workers achieves better outcomes.

This language has softened over 2026 as retrenchments spiked. During an August debate on the WP’s economic plans, where the opposition party asked for mandatory retrenchment benefits, the Government agreed with this need, but said it would consult employers and unions before deciding.

Lau this time round stopped short of promising a blanket mandate, warning that some employers face financial difficulties, and that a rigid obligation could risk more jobs.

In 2025, 88% of employers that retrenched workers paid benefits. Of those that did not, about one in five cited financial difficulty.

This means nearly one in 10 employers that laid off workers did not pay benefits – usually two weeks to a month of salary per year of service – for reasons other than financial difficulty.

Another area PAP MPs pressed the Government on was the effectiveness of current laws on mandatory notifications of retrenchments, which do not require employers to notify the authorities or unions before telling affected staff.

Labour MP Patrick Tay (Pioneer) asked about the difficulty of reaching workers when notifications come in after they have left the company, while Alex Yeo (Potong Pasir) asked if MOM would review the adequacy of advance notice for laid-off workers.

Union-linked MPs have previously pushed for early notifications to be put into law, arguing that later notifications slow down the process of helping workers.

The spike in retrenchments may spur the Government to consider this now, after long resisting it due to the possibility of increasing costs for businesses.

Lau told MPs these issues are being looked at as part of an ongoing review of the Employment Act – Singapore’s main employment law, which has not been comprehensively amended since 2018. The recommendations from the group working on this are due by end-2026.

The Government may opt for a softer approach, as it faces pressure to legislate for a problem whose shape is still unclear.

Legislative changes will be hard to roll back if the situation shifts drastically again, and the authorities may prefer to wait until things are clearer before moving.

It is unclear whether the retrenchment spike reflects short-term pressures in specific industries, or a structural shift driven by artificial intelligence, tariffs or other factors. Over three in four retrenched workers in the second quarter lost their jobs to restructuring, but Lau said her ministry cannot yet isolate AI’s effect.

Sustained high retrenchment numbers and more evidence that they are the result of a long-term trend like AI reshaping industries will lead to more pressure from MPs from both parties to legislate.

One middle way forward is for the Government to adjust the tripartite advisories and guidelines instead of legislating new worker protections.

Guaranteeing benefits could cushion retrenchment for workers, but MPs’ push for early notification points towards what could be the larger issue: re-employment.

The point of advance notice is to get workers into new jobs faster, and on that front the numbers have slipped.

Lau noted that the proportion of retrenched residents returning to employment within six months declined from 60.7% in the first quarter to 54.9% in the second quarter of this year.

Fresh graduates are also taking longer to get hired into full-time employment, she added.

This has deeper implications for the Government’s pledge to protect workers rather than jobs. The promise points to the overall unemployment rate rather than quarterly retrenchment figures as the wider scorecard.

The rate remains low at 2.9% for residents in Q2, despite the spike. But for it to stay low, workers need to get into jobs and fresh graduates need to get hired.

For now, the Government wants to do this without changing how it targets its hiring support.

Towards the end of question time, Lau turned down a suggestion from Shawn Loh (Jalan Besar GRC) to give tiered support to firms to hire workers, based on how long they have been unemployed for.

She said a better approach is to train workers well and make sure they have the right skills to get jobs on their own.

That system includes the NTUC’s company training committees, which PM Wong said the Government would scale to deal with disruption, and the new Skills & Workforce Development Agency.

The outcomes from these two organisations, which have been central to the Government’s strategy to deal with job disruption, will likely be the next point of MPs’ scrutiny.

If hiring trends continue, they will soon feel political pressure to produce.