Singapore businesses expect weakened economic conditions in the next 12 months as increased business costs emerge as top concern.
However, employment outlook remains positive, with a significant majority of Singapore businesses expecting no change or an increase in the manpower in the next 12 months. Most businesses had to increase salaries in the last 12 months and a similar proportion will continue to do so in the next 12 months.
A significant majority of companies (84%) had sent their employees for training in the last 12 months. However, the tight labour market means that companies have trouble in sending their employees for training because there is no backfill. There is also a need to improve the relevance of training to the job for some sectors.
These were among the key findings in the latest Singapore Business Federation’s (SBF) Survey on Manpower and Wages 2023. The survey, which was carried out from 20 July to 31 July 2023, drew responses from 282 companies across all major industries. Of the 282 companies, 79% were small and medium-sized enterprises (SMEs) and 21% were large companies.
Business Outlook
More companies (35%) expect business conditions to worsen in the next 12 months than improve (28%). At the sectoral level, more companies in the ‘Information and Communications & Professional Services’ (50%), ‘Retail, Hotels & Food and Beverages’ (45%) and ‘Wholesale Trade’ (44%) expect worsening conditions.
Meanwhile more companies in the ‘Construction & Civil Engineering’ (59%), ‘Real Estate’ (57%), ‘Logistics and Transportation’ (55%), and ‘Banking, Finance, Insurance & Accounting’ (52%) expect that it will remain unchanged.
3 in 5 companies (61%) indicated that inflationary pressure leading to increased business costs is the top factor impacting their businesses. At the sectoral level, the 3 sectors with most companies citing this as the top factor are ‘Real Estate’ (100%), ‘Health & Education’ (80%) and ‘Information and Communications & Professional Services’ (72%).
More companies (45%) expect business revenue to decline in the next 12 months than improve (33%). At the sectoral level, more companies in the ‘Wholesale Trade’ (58%) and ‘Construction & Civil Engineering’ (49%) expect declining revenue while more companies in the ‘Banking, Finance, Insurance & Accounting’ (62%) and ‘Information and Communications & Professional Services’ (44%) expect improving revenue.
While there is a mix of expectations in terms of increasing and decreasing revenue, a significant majority of companies (85%) expect business cost to increase in the next 12 months. More large companies (45%) expect cost increase by up to 10%, whereas more SMEs (42%) expect an increase between 10% and 25%.
Manpower & Wages
Despite the weakened economic outlook, employment outlook remains positive. 1 in 2 companies (51%) had no change to their full-time employees in the last 12 months and a similar number (53%) do not expect a change in the next 12 months.
More companies (36%) expect to increase headcount in the next 12 months, compared to the last 12 months at 29%. Correspondingly, while 19% of companies reported a decrease in manpower in the last 12 months, the percentage of companies expecting a decline in manpower in the next 12 months declined to 10%.
20% of companies experienced an increase in headcount in the last 12 months and expect to further increase in the next 12 months. The top 3 sectors in this category are ‘Banking, Finance, Insurance & Accounting’ (38%), ‘Retail, Hotels & Food and Beverages’ (30%) and ‘Health & Education’ (20%). Conversely, 6% of companies experienced a decrease in headcount in the last 12 months and expect to further decrease in the next 12 months. The top 3 sectors in this category are ‘Construction & Civil Engineering’ (10%), ‘Logistics & Transportation’ (9%) and ‘Retail, Hotels & Food and Beverages’ (9%).
88% of large companies increased salaries in the last 12 months and 86% of them expect to increase salaries in the next 12 months, whereas 73% of SMEs did so in the last 12 months and 62% of SMEs expect to do the same in the next 12 months.
On the whole, 61% of companies had increased salaries in the last 12 months and will continue to increase salaries for the next 12 months. This will contribute to increased business costs even as economic outlook weakened.
Training & Upskilling
84% of companies had sent their employees for training in the last 12 months. More employees from large companies have undergone training (46%) compared to SMEs (33%).
It is encouraging that a significant majority of companies send their employees for training, although more could be done to encourage SMEs to send more of their employees for training.
However, the tight labour market means that companies have trouble in sending their employees for training due to lack of backfill. 59% of companies cited ‘limited manpower resources to cover for staff who are undergoing training’ as the top challenge faced when considering sending their employees for training.
The top 3 sectors citing this as the key challenge are ‘Real Estate’ (86%), ‘Retail, Hotels & Food and Beverages’ (76%) and ‘Manufacturing’ (62%).
There is also a need to improve the relevance of training to the job for some sectors. 35% of companies cited ‘training programmes not offering practical business applications and outcomes’ as the key challenge. The top 3 sectors citing this as the key challenge are ‘Banking, Finance, Insurance & Accounting’ (52%), ‘Health & Education’ (50%) and ‘Logistics & Transportation’ (41%).
Overall
On the whole, the survey results suggest that employment outlook remains positive although more businesses expect economic outlook to weaken. As such, there is a need for a moderation in the wage increases for the next 12 months.
Mr Kok Ping Soon, Chief Executive Officer of SBF, said, “Businesses expect employment outlook to be positive even though business conditions have weakened. Nonetheless, there are sectors that expect to do well just as there are sectors that will continue to face headwinds. Hence, differentiated and sustainable wage growth that keeps with the underlying productivity growth of the sectors is important.
“Training and upskilling of the workforce are key contributors to increase productivity growth. While there is no shortage of training programmes with a high level of awareness and generous funding support, we need to address operational challenges of companies by considering more on-the-job training instead of structured training that takes the employees away from the workplace and strengthened the linkage between training and job roles.”
