2023 is already here. Even though the Covid-19 situation has gone down, the global economy is forecasted to tip into recession. The Singapore Business Federation (SBF) has published their National Business Survey 2022/2023, indicating manpower and increased costs are the most significant challenges for Singapore businesses this year.
The survey was conducted from August to November 2022, with the participation of 931 companies — 83 percent were small or mid-sized businesses, and 27 percent were large enterprises.
Singapore businesses approach 2023 with more positivity yet greater caution
Business sentiments are more favorable than in 2021, with 52% of companies happy with the current business climate compared to 37% in 2021. They are, however, more cautious — 26% of firms anticipate a slowdown of the economy in the coming year, up from 13%.
Limited pool of local talent is reported as a key challenge for businesses in Singapore
Manpower issues and rising costs emerge as critical areas of concern. According to the survey’s results, almost all businesses encounter manpower problems. On top of that, lacking skilled local employees appears as a major reason for these issues.
- 96% of companies continue to face manpower issues
- The leading causes of manpower issues are listed:
- Rising manpower costs (75%)
- Attracting and keeping younger employees (51%)
- New foreign manpower policies raising costs (48%)
- Limited pool of local high-skilled workers (47%)
- Stricter policies regarding hiring foreign employees (43%).
- These challenges are faced by both SMEs and large organizations.
Singapore businesses’ key challenges
Aside from manpower, the increase in overall business costs is listed as the top challenge faced by Singapore companies.
97% surveyed said they expected cost inflation to continue into 2023, and a third reported they had been negatively impacted by it.
“While business sentiments are generally on an upward trajectory post-pandemic, most Singapore businesses are approaching 2023 with greater caution on the back of heightened cost pressures and continued manpower challenges.”Albert Tsui, SBF’s executive director of advocacy and policy division.
Businesses find digital transformation as a solid solution to tackle cost pressures
The majority of surveyed companies reported they were setting up cost-saving measures as part of efforts to manage inflationary risks. Raising products’ prices (42 percent), and renegotiating financial terms with their suppliers and clients (38 percent) were also indicated as their actions to reduce the damage of cost issues.
And they have made some progress.
About 54 percent shared they had seen greater productivity and 44 percent stated lessened operational costs thanks to digital transformation efforts.
On the other note, businesses have started to invest more in inclusion and diversity:
- 81% implemented health and safety policy
- 71% onboarded fair and equitable employee pay and rewards policy
2023 priorities and plans
Singapore businesses’ top priorities for 2023 were:
- Growing revenue (66%)
- Reducing costs (43%)
- Assuring positive cash flow (42%).
Regarding action plans, companies indicated they were looking to raise salaries (40 percent), invest more in new technologies (32 percent), and re-engineer business and operational strategies (28 percent).