The first three months of the year saw the steepest fall ever recorded in the number of people employed here, compared with the previous quarter, and there is worse to come.

The total number of people working, excluding maids, fell by 25,600 in the three months to March 31 - the biggest quarterly contraction on record.

Much of the decline was due to significant cutbacks in the number of foreign workers. But local employment also dropped slightly due to a sharper-than-expected fall in headcount in the trade and tourism-related industries, said the Ministry of Manpower in its labour market report for the first quarter.

The contraction in the number of those employed was worse than the estimated drop of 19,900 outlined in preliminary data.

Retrenchments also increased over the quarter, while the seasonally adjusted number of job vacancies fell to the lowest level since September 2010.

But the employment situation has yet to hit rock bottom as the circuit breaker measures kicked in only during the second quarter.

Manpower Minister Josephine Teo said: "In January, there was still a lot of new year festivities... In February, tourism was already quite badly hit, but the further travel restrictions that we see today had not yet started.

"In other words, the full effects of Covid-19 certainly have not been felt in the first quarter."

The unemployment rate for citizens rose to 3.5 per cent in March from 3.3 per cent last December, after accounting for seasonal variations. Total unemployment stood at 2.4 per cent, still well under the previous high of 4.8 per cent in September 2003 following the severe acute respiratory syndrome or Sars crisis.

Economists are bracing themselves for bleaker numbers ahead.

CIMB Private Banking economist Song Seng Wun said: "We had not expected the pandemic and its severe impact. Businesses were caught very much out of the blue, especially those in the direct line of impact like travel and leisure. Some food and beverage firms have already shuttered, with others announcing that they are closing, so this is where the impact on the labour market will be felt."

Around 3,220 workers were laid off in the first quarter compared with the 2,670 in the last quarter of 2019.

There were 1,537 local employees affected by their companies shutting down from January to March, compared with 628 in the fourth quarter of last year.

Mrs Teo noted that measures like the Jobs Support Scheme have prevented the unemployment rate or retrenchments from spiking sharply.

"Instead of retrenchments, we saw a fivefold increase in the number of employees who were placed on shorter work weeks or temporary lay-offs... (which) suggests measures that are supported by tripartite partners (are working). Although they involve some sacrifices on the part of the workers, they are also helping to preserve jobs," she said.

Some 4,190 employees were placed on new arrangements that involved working shorter weeks or being temporarily laid off in the first quarter, compared with 840 in the last quarter of 2019.

There was also a fall in the average weekly total paid hours worked per employee, from 44.7 hours last December to 44.4 hours in March this year, with an average of 2.4 hours of paid overtime a week.

Mrs Teo said: "We do not know exactly how the second quarter will turn out but it is best for us to get ready and be prepared for more job losses, and we have to try our very best to open up more pathways for job seekers."

Such pathways include traineeships for fresh graduates and mid-career professionals, to help them boost their resumes even when companies might not be ready to hire them full-time due to the uncertain economic outlook, she added.