Overview: A shifting manpower landscape in 2026
Singapore’s labour market faces a year of recalibration as companies adapt to an uncertain global economy. Industry observers expect a measurable tilt toward contract or project-based roles, a trend driven by cautious hiring sentiment and the need for greater workforce flexibility. At the same time, foreign labour costs are rising, pressuring employers to rethink headcount strategies, wages, and productivity gains. Taken together, these forces are likely to redefine how firms recruit, retain, and manage talent in 2026.
Contract hiring takes center stage
Contract-based roles are anticipated to grow as firms seek to align manpower with project cycles and demand volatility. Unlike permanent hires, contract workers offer scalability, faster onboarding, and cost control during downturns. Experts note that project-based staffing can help firms fill skill gaps quickly, particularly in technology, logistics, and healthcare, where demand remains robust even in slower economic climates.
However, this shift does not come without caveats. Contract workers may face less job security and fewer benefits, which could affect morale and long-term retention. Companies will need to invest in inclusive onboarding, clear performance metrics, and pathways to permanent roles where feasible. Career progression for contract workers could become a key differentiator for firms seeking top talent in a competitive labour market.
Rising foreign labour costs and their impact
One of the defining pressures on Singapore’s manpower costs in 2026 is the ascent of foreign labour expenses. Increases in levies, visa processing, and compliance costs are translating into higher total compensation packages to attract and retain skilled non-resident workers. For the many sectors reliant on foreign talent—construction, manufacturing, and information technology—the cost dynamics are shifting, prompting a reevaluation of wage structures, productivity incentives, and automation adoption as long-term remedies.
Businesses may respond with a combination of higher wages for critical roles, more targeted recruitment, and greater use of digitisation to improve efficiency. Some firms could also explore talent diversification, turning to specialists in nearby markets or expanding training pipelines to develop local capabilities, mitigating exposure to foreign labour cost fluctuations.
Productivity and skills development as key levers
With manpower costs under scrutiny, productivity growth becomes a focal point for sustaining output without proportionate wage inflation. Employers are expected to prioritise upskilling, reskilling, and the adoption of automation and digital tools. A skilled workforce can offset some of the pressures from higher foreign labour costs by delivering more output per worker and reducing cycle times for critical projects.
Public policy and industry programmes may reinforce these efforts, offering incentives for companies that invest in training local hires and cross-sector mobility. In this context, firms that pair contract-based hiring with robust training pathways could reap the benefits of a more adaptable, capable workforce in 2026 and beyond.
Strategic implications for employers
To navigate 2026 effectively, HR and finance leaders should consider several strategic moves:
- Clarify the role of contract workers within the workforce plan, including clear performance goals and potential conversion to permanent roles.
- Revisit total recompense packages to remain competitive while managing overall cost growth tied to foreign labour.
- Invest in productivity-enhancing technologies and targeted upskilling programs to stretch the value of every employee, regardless of tenure.
- Explore local talent development initiatives to reduce dependency on foreign labour over time.
What to watch as the year unfolds
Observers will monitor wage trends, visa policies, and macroeconomic signals as barometers of how Singapore’s manpower landscape evolves. If contract hiring expands and foreign labour costs continue their ascent, the emphasis for many firms will be on agility, targeted investments in people, and smarter use of automation to maintain competitiveness in 2026.
