Singapore firms rethink hiring as AI reshapes productivity

Companies are recalibrating workforce plans as sector divergence, investment uncertainty, and uneven AI integration reshape hiring decisions.

Singapore companies are becoming more cautious about hiring, but weaker employment intentions point to a recalibration of workforce investment rather than a broad labour market retreat, according to Marsh Asia.

Q3 employment expectations have fallen to 13%, their weakest since 2021. Lewis Garrad, Workforce and Rewards Leader at Marsh Asia, said underlying labour market conditions remain resilient, with unemployment around 2% and retrenchments low and stable.

“I would consider it to be more of a recalibration rather than a retreat,” Garrad said.

The slowdown is also uneven across industries. Manufacturing continues to post a relatively strong outlook, whilst finance and real estate are expecting some moderation. Companies are increasingly reassessing roles against labour costs as they determine their workforce requirements.

Technology adoption could widen that divergence. Whilst Singapore has high individual adoption of artificial intelligence, Garrad said corporate performance increasingly depends on whether companies integrate AI into how work is performed.

Companies that redesign work around AI whilst aligning workforce planning and skills strategies could accelerate ahead of businesses that fail to make similar changes.

Hiring could strengthen once businesses have greater certainty over investment returns. “Clarity beats stimulus,” Garrad said, adding that uncertainty is contributing to the slowdown in some sectors.

He said companies should shift their focus from the cost of hiring towards the productivity generated by workforce spending, particularly as AI becomes more embedded in business processes.

The current hiring slowdown could also give employers an opportunity to invest in skills rather than simply reduce workforce expenditure.

Garrad said businesses can use the period to identify critical capabilities and take advantage of available labour in the market.

For Singapore employers, the next hiring cycle will therefore depend not only on economic conditions, but also on whether companies can establish clearer returns from workforce, technology and skills investments.