Manpower and higher costs remain core challenges for firms in Singapore
As manpower challenges and increased costs emerged as key concerns for organisations in Singapore, they are approaching 2023 with greater caution. Nearly all organisations report facing manpower issues, especially manpower costs and foreign manpower, and wages pose the biggest challenges to them as they compete to attract and retain talent, according to the National Business Survey (NBS) 2022/2023 by Singapore Business Federation (SBF).
The survey revealed that 96% of organisations face issues relating to manpower, specifically costs and foreign labour. There are many factors contributing to these issues, including rising manpower costs (75%), attracting and retaining younger employees (51%), new foreign manpower policies that raise costs (48%), limited pool of local high-skilled labour (47%), and stricter policies that restrict the supply of foreign employees (43%).
Among the top challenges pertaining to costs faced by businesses are those related to wages (79%), logistics (52%), procurement (48%), and utilities (45%).
Looking ahead, organisations plan to increase salaries (40%), invest more in new technologies (32%), and staff training (27%), re-engineer business and operational processes (28%), as well as diversify their supply chains to build resiliency (27%), the survey noted. The top priorities for businesses are growing revenue (66%), reducing costs (43%), and ensuring positive cash flow (42%).
Overall, the survey found that business sentiments have continued to rise for the second consecutive year since the pandemic, from 23% in 2020 to 37% in 2021 and 52% in 2022. In the next 12 months, 40% of organisations said they expect the local economy to improve in 2023, while 26% expect it to worsen. As a reflection of the cautious sentiments, 97% of organisations anticipate inflationary pressures to continue into 2023.