Firms may need to shell out extra $29,100 per highly skilled finance worker by 2030.
The global talent crunch is expected to hammer countries short on manpower like Singapore as bosses are left with no other choice but to shell out more money in order to retain top talent, according to consultant Korn Ferry.
In eight years time, Singapore could rank amongst the top 10 economies with the largest wage premiums estimated at around US$34b. Employers could pay an extra $29,065 per highly skilled worker annually by 2030, to amass as much as 10% of the 2017 GDP in compensation packages alone.
“By 2030, organisations in the country can expect to add approximately US$50b to their annual cost of labour, the result of a shortage of highly skilled workers that could dramatically drive up salaries for the most in-demand labour,” Dhritiman Chakrabarti, head of rewards and benefits, APAC, Korn Ferry told Singapore Business Review.
The lion city's skilled talent shortages as a proportion of total demand could hit 13% in 2020, double to 26% in 2025, and hit as high as 38% in 2030 which are all higher than the global averages of 7%, 11%, and 16%.
However, industries like the financial services sector are more vulnerable to the talent shortage as employees need to work double time to catch up to the fast-paced technologies banks deploy.
“In Singapore, financial and business services will face the most acute talent shortage by 2030, at approximately US$29.2b of potential revenue loss. This would translate to an additional average pay premium of approximately US$29,100 per worker per year,” Chakrabarti warned.
The share of compensations and benefits (C&B) packages as a percentage of company revenues is highest in the hyper competitive technology services landscape where the share is more than 40% unlike labour-intensive manufacturing industries where C&B only account for less than 10%, Korn Ferry data showed.
High-growth industries like fintech and medical and healthcare sectors are also poised to bleed more money for pay hikes, added Jeffrey Ng, director of Michael Page Singapore.
Hong Kong, which has a similarly limited talent pool, also faces the same harsh fate where firms are expected to shell out an additional $40,539 in salary per worker annually by 2030. On the other hand, populous countries like India are expected to be spared from this global dilemma as it is expected to have a talent surplus by 2030.
With hiring no longer a viable option, firms have no other choice but to ramp up their upskilling and reskilling programmes, equipping workers with the skills needed for the increasingly digital economy.
“Companies can ease the candidate shortage by planning a talent pipeline in advance. This plays into the organisation’s larger human capital strategy where they identify the skills required to take their business to the next level. Companies can then decide if those skills can be developed internally or will have to be acquired from an external hire,” said Ng.
Major lenders like OCBC and UOB have earlier launched respective upskilling programmes in a bid to strengthen the digital capabilities of their employee pool.
“The future of work is one of scarcity in abundance: there are plenty of people, but there are not enough who currently have the skills organisations need. In this environment, companies that focus on upskilling, engagement, and retention have a competitive Advantage,” according to Korn Ferry’s Chakrabarti.
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