Singapore talent shortage stumping SME growth

Roughly 70% of CEOs had to cancel strategic plans due to talent shortage and no respite is in sight, says PWC.

The recent budget pronouncements revealed even higher levies and lower dependency ratio ceilings (DRC) for foreign worker hiring. PricewaterhouseCoopers belives this will hamper Singapore companies from accomplishing their growth plans.

This is because firms have to either wage war for talent, paying significantly higher costs to attract and retain employees, or scrap initiatives altogether due to a lack of appropriate manpower.

"Feedback from business leaders in the run up to the Budget, particularly in the small and medium enterprise space, had clearly spelled out that the tightness of the labour market was hampering expansion, in some cases even survival of businesses who were desperate to hire, but who simply could not find what they were after. It probably goes without saying that Singapore businesses would rather employ Singaporeans, but those with the requisite skills are either not available, or reluctant to do the type of work involved," said PWC.

"The difficulty really is one of timing. It is not a case of turning one tap off and opening up another. The DRC changes have an immediate effect. Replacing staff with innovatory machines, techniques or processes takes time and often significant capital outlay. Although the proposals that then encouraged the retention of the older workforce might compensate for this shortage, they would only do so to a degree. Some jobs, particularly those that require some manual input, can simply not be done by 65-year-olds," it said.

"Nevertheless the proposed measures to extend working lives are still to be commended as they address another increasingly troubling social issue, which is the need for older workers to stay in jobs as a matter of financial survival. Ultimately however, it is strongly suspected that the feedback from businesses in the human capital space will not be much different in the run up to next year’s Budget from what it was in this," it added.

"Continued global volatility may appear to be the order of the day, but the bullish confidence of Asia Pacific companies in their own performances has manifested in a war for talent. According to PricewaterhouseCoopers’ Global CEO Survey 2012, around 55 per cent of APAC chief executives surveyed anticipated increasing company headcount over the next three years — even as 70 per cent admit that hiring has become more difficult in the past 12 months," it said further.

"This war for talent is beginning to have a quantifiable impact on companies the region. Approximately 70 percent of CEOs have had to cancel strategic initiatives in the last year due to talent shortage. The same percentage of CEOs report that talent costs have risen beyond expectations," PWC said.

"These immediate pressures are worsened by a growing need for agile company leaders who can navigate a volatile environment and drive growth through a period of fast-paced change. Having their skills in such high demand gives top performers greater mobility in an otherwise moribund employment market, causing companies to lose talent they can ill-afford to let go. Given this unpromising scenario, Singapore — with its wide exposure to international markets and constant under-supply of human capital — is likely to be affected," it added.