Economy and Labour Market

Robust economic fundamentals

As a small and open economy, Singapore is vulnerable to structural shifts in the global economy. Singapore’s external operating environment has become more fractured and contested, with a noticeable shift from globalisation to greater economic fragmentation, increasing geopolitical uncertainties, and growing nationalist and protectionist tendencies.

Nevertheless, Singapore continued to strengthen our economic fundamentals to remain competitive, achieve healthy economic growth, and create more opportunities and a better quality of life for all Singaporeans.

• Between 2019 and 2023, Singapore’s real Gross Domestic Product (GDP) grew at an annualised rate of 2.6%. In 2023, our economy expanded by 1.1%, with growth mainly driven by the information and communications, transportation and storage, and other services sectors.

• Real GDP is expected to grow by 2.0% to 3.0% in 2024, supported by a gradual pickup in the manufacturing and trade-related sectors on the back of robust electronics demand. The continued recovery in air travel and tourism demand will also support growth in the aviation- and tourism-related sectors, while growth should remain healthy in the finance and insurance sector.

In 2022, inflation in Singapore surged following sharp increases in global energy and food commodity prices and a tight labour market. Inflation remained elevated in 2023 but slowed significantly over 2024, reflecting the effects of the appreciating Singapore dollar, alongside declines in food commodity prices and the dissipation of labour market tightness.

Choice location for investments

Amidst a volatile geopolitical environment and macroeconomic uncertainties, Singapore remained a choice location for new investments and the expansion of business activities.

• Business formation remained strong, with more than 70,000 business entities formed in 2023, higher than the 64,000 yearly average from 2019 to 2022.
  

• The stock of foreign direct investment (FDI) in Singapore grew by 36.4% between 2019 and 2022, from $1.9 trillion to $2.6 trillion. This increase was led by higher FDI flows in the finance and insurance, wholesale and retail trade, and manufacturing sectors. Singapore’s FDI inflows in 2022 were the third largest globally, after the United States and China, and the second-largest in Asia after China.

• In 2023, the Economic Development Board (EDB) attracted investment commitments amounting to $12.7 billion in fixed asset investment (FAI) and $8.9 billion in total business expenditure (TBE). Global manufacturers in various domains such as semiconductors, healthcare, specialty chemicals, and aerospace have continued to invest in Singapore to strengthen their supply chain resilience to serve customers worldwide, especially in Asia. In addition, more Information and Communications Technology (ICT) companies undertook headquarters activities in Singapore. When fully realised, these investments are expected to create more than 20,000 jobs with a projected contribution of $26.7 billion in Value-Added (VA) per annum. Over time, these investments will attract new capabilities, strengthen our economic resilience and catalyse more job and business opportunities in Singapore.

Singapore has maintained extensive trade ties with many countries and our key export markets including ASEAN, the United States, China, the European Union, and Hong Kong.

• Between 2019 and 2023, Singapore’s merchandise and services exports enjoyed robust growth, increasing at annual average rates of 4.6% and 9.6% respectively.

• However, Singapore’s merchandise exports contracted by 10.1% in 2023, as both domestic exports and re-exports fell. Non-oil domestic exports declined by 13.1% due to fewer shipments of electronics and non-electronics products. Similarly, Singapore’s services exports fell by 5.1% in 2023, on the back of a decline in the exports of transport services. This was partially offset by increases in the exports of travel services, other business services, and financial services.

Industry transformation

We pressed on with our industry transformation efforts across 23 sectors through the Industry Transformation Maps (ITMs), covering about 80% of our economy. While transformation efforts take time, our progress has been encouraging.

• Since the progressive launch of ITMs from 2016, overall labour productivity for the 23 ITM sectors grew by 2.4% per annum (p.a.) between 2016 and 2023, despite economic shocks from the COVID-19 pandemic.

• Nonetheless, productivity trends varied across ITM sectors, with outward-oriented ITM sectors recording stronger gains in labour productivity (3.1% p.a.) compared to the domestically-oriented ITM sectors (-0.3% p.a.). The weaker productivity growth among domestically-oriented sectors was partly due to operational disruptions during the pandemic, and generally manpower-intensive job roles with limited automation potential in the near-term.

• Along with improved labour productivity, wages for resident workers also rose. Between 2016 and 2023, real median gross monthly income of full-time employed residents working in ITM sectors increased by 1.9% annually.

Read more on the progress of the ITMs: Transforming the Singapore Economy Report

A globally competitive workforce

Singapore ranked second on INSEAD's Global Talent Competitiveness Index in 2023 and the International Institute for Management Development (IMD)'s World Talent Ranking in 2024, underscoring our attractiveness to global talent and strength in developing our local skilled workforce.

To raise Singapore’s competitiveness, we invested in our local workforce to take charge of their career health and seize opportunities to upskill and reskill to remain relevant.

We continued to enjoy high employment rates among the various segments of our local workforce, including fresh graduates, mid-career workers, and senior workers. In tandem, we rolled out a slate of broad-based local workforce development initiatives.

Read more: Quality Jobs

We sharpened our focus on developing our local corporate leadership:

• As at August 2024, more than 200 Singaporeans have benefitted from the International Postings Programme (iPOST). iPOST supports financial institutions (FIs) in sending their Singaporean talent across all levels on overseas postings to acquire new skills, knowledge and networks, and groom them for future leadership roles. This allows FIs to build international capabilities within their workforce and strengthens their ability to better serve regional and global markets.

• From July 2024, more Singaporean middle-to-senior managers with leadership potential will be supported through the Global Business Leaders Programme (GBLP) [PDF, 85.5 KB] to access developmental opportunities that will prepare them for regional or global corporate leadership roles. GBLP participants would subsequently be emplaced on the Singapore Leaders Network Fellowship, which was launched in January 2024. They will receive mentoring and access to a community of peers to navigate the complexities of the global business landscape.

• From July 2024, businesses with overseas expansion plans can tap on the Overseas Markets Immersion Programme to receive financial support to reskill local employees with little to no overseas market experience through overseas postings. This will better position businesses to expand and compete in overseas markets, with a strong globally oriented team.

Even as we invest in developing our local talent, we have enabled our businesses access to a global workforce to support their growth.

• Businesses can leverage on the Overseas Networks and Expertise (“ONE”) Pass, launched in 2023, to facilitate access to top global talents with valuable networks, deep skills, and expertise. As at January 2024, businesses had benefitted from our approval of nearly 4,200 ONE Pass applications.

• We continue to attract global talent in growing sectors with skills shortages, such as in the green economy. For instance, Employment Pass applicants with highly specialised skills who can fill acute occupational shortages in areas of economic importance, will receive bonus points under the Complementarity Assessment Framework. This will help support industry needs as the local workforce develops.

Investing in local talent and remaining open to skilled foreign manpower are important for making Singapore an attractive location for businesses.

We partnered with the industry to strengthen the capabilities of businesses to upskill or reskill their workers. In 2023, 23,000 businesses (15% increase from 2022) sent more than 220,000 employees for training programmes supported by SkillsFuture Singapore, primarily to raise digital capabilities and to help meet business regulatory requirements. These programmes included:

• Skills advisory support and curated training solutions by SkillsFuture Queen Bees (SFQBs), who are private sector industry leaders taking on a leading role to spearhead skills development within their specific sectors. From the launch of the scheme in 2020 to June 2024, more than 3,500 businesses have benefitted from training programmes delivered by SFQBs.

Feature Story: SFQB – Sheng Siong

As an appointed SFQB for the wholesale trade sector, Sheng Siong partners with its suppliers to uplift their capabilities in digitalisation and sustainability, and accelerate workforce transformation. As at June 2024, Sheng Siong has worked with 115 suppliers to address business needs and skills gaps in digitalisation.

One such beneficiary is Lim Kee Food Manufacturing (LKFM), a local food manufacturer specialising in the manufacturing and distribution of oriental steamed buns. Through Sheng Siong’s cross-sharing of industry insights, LKFM was able to streamline and automate business processes such as invoicing, resulting in productivity gains. With Sheng Siong’s support, LKFM adopted data analytics to better adapt its products to market demands and identify training needs and areas for capability-building such as Environment, Social, and Governance. This has allowed LKFM to enhance its business resilience and set itself apart from its competitors.

• Building stronger workplace learning capabilities, supported by the National Centre of Excellence for Workplace Learning (NACE). Since 2018, NACE has supported more than 2,500 businesses in building up and professionalising their workplace learning processes and capabilities, in sectors such as Professional Services and ICT and Media. These companies were able to provide more opportunities for skills upgrading at the workplace. This reduced the downtime needed to send workers for external training. With a stronger workplace learning culture, companies have collectively benefitted from increased productivity and retention of employees.

• Skilling workers for emerging needs. We continued assisting businesses to build capabilities for the Digital, Care, and Green economies. Through SkillsFuture Series courses, businesses had access to close to 5,000 courses in 2023 for short-form, just in-time training in emerging skills. We have also expanded training capacity to assist businesses in building capabilities in sustainability reporting and green financing. This would equip businesses, especially small and medium enterprises, with the skills to understand and prepare sustainability reports, as well as incorporate sustainable finance into their business and financing strategies.

Read more: Quality Jobs

The way ahead

We face a rapidly evolving external environment. While major economies are expected to remain resilient, significant downside risks persist in the global economy.

Businesses, workers, unions, and the Government must continue working together to sustain Singapore’s global relevance, competitive edge and a productivity-driven economy that creates good jobs for Singaporeans.

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