Businesses rely on manpower to fuel their expansion. In turn, business growth feeds productivity and GDP. Employees are a business’s biggest asset, so it’s crucial that businesses have access to a diverse pool of qualified talent.
The latest figures indicate that the Singapore economy grew by 2.1% in the last quarter, which is below the previous estimate of 2.8%, and much lower than the 1.2% growth in Q4 of 2017. This will likely spark concerns among businesses in Singapore that manpower restrictions are strangling growth in key sectors.
The Singapore population has remained stable since 2011. As of June 2017, there were 3.44 million Singaporean citizens, 0.53 permanent residents, and 1.65 million non-residents. These figures are relatively high for such a small sovereign island state, but nevertheless, there is a worrying skills shortage in some key sectors.
Businesses can easily keep track of events affecting the economic growth using economic calendar.
Outsourcing Technology Talent
A shortage of skilled talent means many Singaporean businesses outsource their technology needs overseas; it’s the only way they can sustain growth. Skilled developers and other tech professionals are hard to find in Singapore, with relatively few good candidates graduating from local universities each year. One leading cybersecurity firm estimates that as few as 10 students with the right skillset graduate in any given year, and of that limited pool, most gravitate to the financial services sector or tech giants like Microsoft.
Most emerging tech firms and startups have no choice but to outsource their teams. Outsourcing undoubtedly saves money, but the real deciding factor is that there are too few qualified individuals available in Singapore.
Concerns about the lack of highly qualified talent, particularly in areas such as data analytics, cybersecurity, and artificial intelligence, has been an issue for Singapore businesses for a while now, but the Budget 2018 did nothing to appease concerns.
In the months leading up to the November Budget, many businesses were calling on the government to relax manpower policies to allow them to recruit highly-skilled tech talent from overseas. Unfortunately, the Singapore government stood its ground and refused to budge on the main issues, although it did make some concessions.
"We had hoped for some tweaks to be made to our foreign manpower policy, not just for the marine and process industries," said Ho Meng Kit from the Singapore Business Federation.
"Although businesses have accepted and adapted to slow labour growth, concerns continue to grow about the shortage of highly skilled talent as companies intensify their transformation."
Mr Ho believes the government needs to be more flexible in its manpower policies as demand for skilled professionals continues to rise, but experts believe that the government is concerned that if foreign manpower requirements are relaxed, it will discourage businesses from investing in local talent.
Short-Term Flexibility in Overseas Recruitment
The Singapore government is willing to allow short-term flexibility in hiring, but not at the expense of long-term skills shortages. Although businesses are concerned that foreign talent policies are affecting their growth in the short-term, the Singapore government is pushing businesses to train locally rather than outsource.
Manpower Minister, Lim Swee Say, told a delegation of company officials that businesses must have plans in place to develop skills locally, so “short-term flexibility will not lead to long-term dependency". He revealed plans for a funding program that will help local businesses pay for foreign trainers to boost the skills of local workers.
Singapore Candidates Must Come First
There are already Professional Conversion Programs in place to help workers retrain so they find employment in fast-growing sectors. There is also some leeway for Singaporean businesses when recruiting foreign nationals. They are allowed to bring in foreign workers if there is a skills deficit locally, but crucially, Singaporeans must be considered before overseas workers are recruited.
The government clearly believes that companies should look to build up key skills among the local population rather than recruit overseas. However, this is not going to happen overnight, which is a huge concern in fast-growing technology sectors.
The danger is that Singapore could be left behind if economic conditions experience volatility in the months/years ahead.