Top Manpower Concerns for Singapore Businesses in 2024

Top Manpower Concerns for Singapore Businesses

Singapore’s tech industry is rapidly expanding, driven by advancements in technology and increasing digital transformation across sectors. As businesses strive for innovation and competitiveness, the demand for tech talent has surged, presenting significant hiring challenges.

According to the Singapore Business Federation’s latest National Business Survey (NBS) 2023/2024, top challenges that businesses need to tackle are manpower related: availability (53%) and retention (42%) of manpower, as well as foreign workforce policies (39%). 

This article delves into the top Manpower Concerns for Singapore in 2024, examining how these challenges impact the industry and business growth.

Top Manpower Concerns 01: Talent shortage

    The tech industry is growing rapidly, and we can anticipate a rising demand for new IT job opportunities in the near future. However, there is still a significant shortage of local talent to fill these roles. According to new research by Morgan McKinley, 76% of technology hiring managers in Singapore found recruitment to be ‘very’ or ‘quite’ competitive in 2023. By 2025, Singapore will require another 1.2 million digitally skilled workers to meet economic demands, representing a 55% increase from the current 2.2 million in the workforce.

    Another report from The Talent Shortage 2024 said, 79% of employers in Singapore are facing difficulties in filling roles in 2024. Although this is slightly down from 83% in 2023, it still represents a significant challenge. This ongoing issue highlights the importance of skilled talent in shaping the future.

    Large organizations, especially those with over 5000 employees, report the highest difficulty in filling roles, with 85% struggling to find suitable candidates. The IT industry is particularly affected, facing the highest talent shortage at 88%. These figures underscore the urgent need for companies to develop effective strategies to attract and retain skilled workers, ensuring they can overcome these challenges and achieve their business goals.

    ​​In 2024, businesses in Singapore are grappling with a significant challenge: escalating business costs, with 75% citing manpower expenses as a primary concern. This financial pressure is further exacerbated by a notable trend identified in a recent Robert Walters survey, which highlights substantial salary increases for tech professionals. As the demand in sectors like AI and sustainable development continues to surge, tech talents are expected to see salary hikes ranging from 10-15%, and even up to 25% in areas facing severe talent shortages. This rise in compensation reflects the intense competition for skilled tech personnel and underscores the urgent need for adept professionals in a competitive market.

    Amidst these economic pressures, Singapore confronts another critical issue common among developed nations—an ageing population and a dwindling birth rate. These demographic challenges slow the development of local tech expertise, a process that cannot keep pace with the rapid demand for skilled workers. 

    Top Manpower Concerns 02: Employee retention

      Retaining tech talent is just as crucial as attracting it. Major tech companies, startups, and traditional businesses undergoing digital transformation fiercely compete for the best professionals. This competition drives up salaries and benefits, making it challenging for smaller companies to attract and retain top talent.

      Research by Morgan McKinley also highlights in 2024, 46% of tech talents are actively seeking new jobs, with another 31% considering a move. For IT employees planning to switch their job, a higher salary is the top priority (40%), followed by career growth and development opportunities (14%), and the ability to work remotely (13%). 

      Work from home’ and flexible working hours are highly valued, ranking first and third respectively among the top five benefits chosen by professionals. Notably, 71% of technology professionals listed ‘work from home’ as one of their top five benefits.

      To address these challenges, companies are increasingly adjusting their benefits packages to better satisfy employee preferences. Offering competitive salaries is essential, but equally important is providing career development opportunities and flexible working arrangements. By understanding and responding to the evolving needs of their workforce, companies can improve their ability to attract and retain top tech talent, ensuring they remain competitive in the rapidly evolving tech industry.

      Top Manpower Concerns 03: AI skills gap

        The pace of AI transformation in Singapore is remarkable, with 94% of employers envisioning their companies becoming AI-driven organizations by 2028. While the majority (91%) believe their IT departments will be the primary beneficiaries, they also foresee significant value being derived from AI in business operations (90%), research and development (89%), finance (89%), sales and marketing (86%), legal (83%), and human resources (81%).

        However, AWS points out that addressing the critical AI skills gap is essential for fully realizing the productivity benefits of AI. Hiring AI-skilled talent is a priority for over 81% of Singapore employers, yet 74% can’t find the AI talent they need. Additionally, there is a training awareness gap, with 82% of employers indicating they do not know how to implement an AI workforce training program. Meanwhile, 78% of workers are unsure about relevant career paths where AI skills are applicable.

        These findings underscore the need for greater collaboration between governments, industries, and educators. Such partnerships can help employers across Singapore implement effective AI training programs and assist workers in aligning their AI skill sets with appropriate roles, thereby maximizing the benefits of AI adoption.

        Top Manpower Concerns 04: Foreign manpower challenges

          The survey by the Singapore Business Federation highlights several key issues contributing to foreign manpower challenges: 70% of businesses reported that changes to the S Pass qualifying salary present a major hurdle, with this concern echoed by both SMEs (70%) and large companies (68%). Additionally, 65% of businesses are impacted by changes to the Employment Pass (EP) qualifying salary, making it increasingly difficult to hire mid-skilled and high-skilled foreign workers​​​​. 

          The report also outlines the significant foreign manpower challenges faced by various sectors, with a particular focus on the IT & Professional Services sector: 

          Changes to Employment Pass (EP) Qualifying Salary

          • 88% of businesses in the IT & Professional Services sector reported that changes to the EP qualifying salary are a major challenge. This is the highest among all sectors, indicating a substantial impact on the ability to hire highly skilled foreign professionals.
          • The EP is crucial for attracting top-tier talent, and the increased qualifying salary makes it harder for companies to meet the required criteria, exacerbating the talent shortage.

          Changes to S Pass Qualifying Salary

          • 63% of businesses in the IT sector are affected by changes to the S Pass qualifying salary. While this is lower than some other sectors like Manufacturing (79%) and Construction & Civil Engineering (83%), it still represents a significant hurdle.
          • The S Pass is designed for mid-skilled workers, and the increased salary requirements can limit the pool of available foreign talent.

          Other Challenges

          • 33% of IT businesses reported issues with the tightening of the overall Dependency Ratio Ceiling (DRC) for Work Permits and S Passes, which limits the proportion of foreign workers a company can hire.
          • 37% indicated challenges with revisions in the S Pass sub-DRC quota.
          • 12% are unable to employ Work Permit holders from specific source countries, although this is a smaller issue compared to other sectors.

          These statistics highlight the significant impact of regulatory changes on the IT sector’s ability to attract and retain foreign talent, which is crucial for its continued growth and innovation. The tightening of these policies underscores the need for more effective strategies to develop local talent while balancing the requirements for foreign expertise.

          Conclusion

          Tech hiring in Singapore faces numerous challenges in 2024, including talent shortages, skill gaps, intense competition, and regulatory changes. Addressing these issues is crucial for businesses to build a strong tech workforce and stay competitive in an ever-evolving digital landscape. 

          By understanding and anticipating these challenges, companies can develop effective strategies to navigate the complex tech hiring environment. Leveraging services like hiring remote tech talent can help bridge the talent gap and support sustained growth and innovation, ensuring businesses thrive in the rapidly evolving tech sector.

          Read more: Top 5 Countries to Hire Offshore Development Team: An In-Depth Comparison of Poland, Ukraine, Philippines, India, and Vietnam

          Curious on how you can access the best tech talent in Vietnam – one of the most popular destinations for offshore developers? Contact us now!

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