AI and Hiring Slowdown Push Singapore Graduates Into Lower-Paid Traineeships

A growing number of Singapore graduates are accepting government-backed traineeships that pay well below typical starting salaries, as AI adoption and cautious corporate hiring reshape the early-career job market. The Graduate Industry Traineeships (GRIT) programme, which places unemployed graduates with government agencies and private employers for six-month stints, offers monthly allowances of S$1,800 to S$2,400 — at the lower end, less than half the median starting salary for university graduates.

The trend reflects a broader structural shift in Singapore's graduate employment landscape. The latest Graduate Employment Survey found that full-time employment rates for business, arts, and science graduates across the city-state's six universities fell by around 10 percentage points between 2023 and 2025. Manpower Minister Tan See Leng has linked the hiring slowdown to economic uncertainty, while Prime Minister Lawrence Wong has warned that AI will eliminate some roles entirely, underscoring the need for workforce adaptation.

The GRIT programme's struggles highlight the disconnect between government intervention and market realities. Applications reportedly dropped by roughly 90 percent between its launch in October and February, with low pay and perceived stigma discouraging participation. Graduates are applying for dozens of roles before receiving few offers, often outside their field and at lower salaries than expected. Government subsidies cover about 70 percent of trainees' fixed compensation, a structure designed to encourage employer participation but one that has not fully addressed the scale of the challenge.

Some employers are making use of the scheme. OCBC recruited 40 trainees across functions such as data and credit analysis after offering 50 positions, demonstrating that structured traineeships can serve as a pipeline for banking talent. But the broader picture suggests that Singapore's transition to an AI-enabled economy is creating a mismatch between graduate expectations and available roles, with entry-level positions bearing the brunt of the shift.

Why it matters for Singapore: Singapore's higher education system produces over 20,000 graduates annually, and the growing gap between their career expectations and the realities of an AI-disrupted job market poses both an economic and a social challenge. If graduate underemployment becomes entrenched, it risks eroding confidence in the returns on tertiary education and creating a lost generation of talent whose early careers are defined by precarious, underpaid placements. The government's heavy subsidy of the GRIT scheme — covering 70 percent of costs — signals awareness of the issue, but the low take-up rate suggests the fix may need to go beyond wage subsidies to include meaningful upskilling and career progression pathways.