Singapore plagued by rising wage pressure in high-skilled industries

Blame it on three pressure points.

The gloomy labour market is causing instability in Singapore's high-skilled operations and industries, according to Hays' 2016 Global Skills Index.

“Economic growth in Singapore has slowed down in recent years which has led to an easing in overall labour market conditions. However Singapore remains a popular choice as a strategic regional hub for multinational corporations looking to expand in Asia and businesses continue to display positive albeit more cautious hiring sentiments,” says Lynne Roeder, managing director of Hays in Singapore.

The Index shows that pressure on Singapore’s labour market comes from three particular indicators, the first of which is ‘wage pressure in high-skill industries’. This measures the rate at which wages in high-skill industries outpace those in low-skill industries and tops the list of Singapore’s pressure points at a score of 8.4 for the second year in a row.

“This score supports what we’re seeing on the ground, that employers in high-skill sectors, such as life sciences and technology, are facing specific skill shortages and strong competition for top talent,” Lynne explains.

Additional pressure comes from ‘wage pressure in high-skill occupations’ for which Singapore received a score of 6.4, an increment of 0.5 since 2015. According to Lynne, “As the candidate pool tightens further in Singapore, some of the highly-skilled occupations facing wage pressures include the likes of engineers, IT and compliance and risk professionals.

“Just as we see in high-skill industries, the high demand but short supply of talent for highly-skilled occupations is leading to wage pressure for suitable candidates.”

Further supporting this is ‘talent mismatch’, for which Singapore received a score of 6.1. This indicates that available talent often does not possess the skills employers want, most often than not in the above-mentioned high-skilled industries and occupations.

Finally, Singapore received a score of 5.5 for ‘labour market participation’, suggesting healthy utilisation of the available workforce. There is however potential to improve this score, as seen by various government measures to engage retired professionals and stay-at-home mothers for example. “We see more and more companies offering flexible benefits such as flexi-hours, work-from-home initiatives to innovative benefits, in an attempt to attract and retain more talent. Such initiatives have the potential to attract and re-introduce experienced professionals back into the workforce,” Lynne comments.

Despite tightening labour conditions, the ‘overall wage pressure’ score eased in 2016, falling from 5.8 to 5.0 which is a reflection of a softer economy with employers being more cautious in awarding premium salaries. As Lynne explains, “Fewer job opportunities in Singapore have influenced candidates to re-evaluate salary expectations when assessing the suitability of a job offer. This has resulted in lower wage pressures on the whole.”