About 40% of businesses intend to increase hiring in next 12 months
Singapore businesses are showing signs of cautious optimism about the economic outlook and their hiring plans for the next year, according to the latest National Business Survey from the Singapore Business Federation (SBF).
While half of the respondents anticipate the economy to remain stable over the next 12 months, 27% foresee an improvement, compared to 24% who expect conditions to worsen.
Reflecting this cautious optimism, 40% of businesses plan to expand their workforce in the next year, a notable increase from 29% in the previous year.
Meanwhile, 48% of companies intend to maintain their current staffing levels, and only 12% plan to reduce their workforce, down by 4% from last year, found the survey, conducted from June 18 to July 16, 2024, of 796 companies across various industries, with 82% of the respondents being small and medium-sized enterprises (SMEs).
Challenges with manpower costs, talent acquisition
Despite the positive hiring outlook, challenges persist, particularly concerning manpower costs and talent acquisition. The SBF survey reveals that 75% of businesses identify manpower costs as their primary challenge. Additionally, the issue of finding qualified local talent has become increasingly pressing, with 61% of companies citing it as a significant concern, up from 40% last year.
“While there are signs of a more positive employment outlook with some businesses seeking to expand hiring and raise wages, a sizeable proportion of businesses continue to be cautious about the future,” said Kok Ping Soon, CEO of SBF. “It is heartening to note that businesses recognise the need to upskill/reskill their workers and more plan to increase investment in staff training in the next 12 months.”
Foreign manpower policies also continue to pose challenges for many businesses. The SBF survey reveals that companies in the Banking and Insurance sector are particularly affected by increased qualifying salaries for Employment Pass (EP) applications. Similarly, the Retail and Hotels, Restaurants & Accommodations sectors face difficulties due to higher qualifying salaries for S Pass applications.
In response to these tightened foreign workforce policies, 46% of businesses are focusing on recruiting more local workers, 35% are outsourcing to third-party contractors, and 29% are considering delaying business expansion plans.
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A significant number of businesses (63%) are calling for a review of foreign worker quotas and work permit regulations, which is a higher priority than support for training and development (51%).
“SBF is also working through the Alliance for Action on Business Competitiveness along with industry stakeholders to review flexibilities in foreign workforce policies to better support our enterprise and workforce transformation,” Kok added.
Shifts in employee compensation, development
The survey results show a shift in how companies are approaching employee compensation and development. While fewer businesses plan to increase salaries (49%, down from 58% last year) and non-salary staff costs (16%, down from 34%), there is a growing emphasis on employee development.
More businesses intend to increase investment in staff training (up to 34% from 27%) and provide flexible work arrangements (up to 24% from 22%).
The SBF survey highlights the widespread recognition of the need for employee upskilling, with 90% of businesses acknowledging its importance to maintain competitiveness. In the past year, 70% of companies have upskilled or reskilled their employees through various training programs. However, businesses face significant obstacles in training initiatives, such as:
- limited manpower to cover for staff undergoing training (55%)
- high training costs (48%)
- concerns about employees leaving shortly after receiving training (35%).
The survey also found that nearly two-thirds of businesses have adopted the National Wages Council’s (NWC) guidelines over the past year, with the built-in wage increase and variable wage component being the most commonly adopted recommendations. However, half of the businesses offering wage increases did so for low-wage workers, while those who did not cited poor business performance as the primary reason.