Singapore confronts 'jobless growth' risk as AI reshapes economy

Singapore faces concerns over 'jobless growth' as AI-driven economic expansion outpaces job creation. Experts warn the phenomenon could concentrate gains among capital owners and elite workers, even as the government insists growth will translate into good jobs.

Singapore may need to rethink the relationship between growth, jobs and prosperity as artificial intelligence reshapes how companies operate and where economic value is created, experts say. The Ministry of Trade and Industry in August upgraded its 2026 economic growth forecast to 4.5 per cent to 5.5 per cent, citing an acceleration in global AI-related capital expenditure. Yet retrenchments in the second quarter rose to 4,620, their highest level since the fourth quarter of 2020, while resident employment growth slowed to 2,200 from 5,400 in the previous quarter.

The phenomenon of 'jobless growth' — a strengthening economy with a stagnant job market — is not confined to Singapore. The Bank of England in July noted that AI adoption has led firms to slow hiring or leave vacancies unfilled to increase output without a proportional rise in headcount. International Monetary Fund chief Kristalina Georgieva said in April that starter jobs for young people are shrinking fast amid AI disruption.

In Singapore, Prime Minister Lawrence Wong told parliament in February that "we will not have jobless growth in Singapore", adding that the government will ensure growth translates into good jobs and better wages. Parliament in May unanimously backed a motion affirming that Singapore must not have jobless growth amid the AI transition.

Labour economist Walter Theseira from the Singapore University of Social Sciences said: "Given the direction of technological developments, and given what basically the economics tells us could happen if this continues, I think it would be irresponsible not to plan for it." The Ministry of Manpower found in April that among companies that have adopted AI, only 6.2 per cent reported reduced headcount, while 8.5 per cent reported lower hiring activity. Most firms redesigned jobs, created new AI-related roles or redeployed workers.

Professor Will Cong, associate dean of Nanyang Business School at Nanyang Technological University, noted that AI agents are themselves capital-manufactured labour that can take on new tasks as readily as old ones. "Firms can now expand productive capacity by training and deploying more agents rather than hiring more people," he said. In the national accounts, this shows up as growth through software and compute investment, not wages.

Associate Professor Theseira argued the underlying concern is "desirable job-less growth" — economic growth that still creates jobs but much less growth among job types deemed desirable. He warned of a bifurcation where AI expands elite jobs while reducing middle-level roles. Dr Eugene Or, a lecturer in applied economics at SUSS, said AI likely increases returns to capital and workers whose skills are highly complementary to AI, citing IMF research suggesting AI could increase wealth inequality through higher returns to capital.

Mr Marcus Lam, executive chairman and CEO of PwC Singapore, noted the firm's 2026 Job Barometer report found AI-related job postings in Singapore rose from about 54,000 in 2024 to about 84,000 in 2025. He added that the most AI-exposed companies recorded stronger headcount growth than the least AI-exposed companies, at 52 per cent versus 36 per cent.