Strategies for small and medium enterprises to navigate Singapore’s tight labour market.
Singapore’s labour market is facing one of its toughest challenges in recent years. As the economy recovers from the pandemic, job vacancies have reached unprecedented levels, with sectors like financial services, information and communications, public administration, education, and professional services leading the demand.
Human capital is a key resource in Singapore, making the attraction and retention of top talent a critical priority for businesses. However, with many companies adjusting salaries and expanding benefits packages in an effort to secure skilled employees, the hiring landscape has become increasingly competitive.
LinkedIn’s “Jobs on the Rise” report reveals that in 2022, 70% of workers in Singapore were contemplating a career move, driven by a desire for greater job satisfaction and a shift in career goals.
The Growing Challenge of Hiring
The difficulty of filling job vacancies continues to grow. According to the Ministry of Manpower, the proportion of unfilled job vacancies increased from 27% in 2020 to 35% in 2021. Employers cite skills shortages and mismatches in work experience as the primary reasons for prolonged hiring processes.
This has resulted in a surge in demand for recruiters and talent acquisition specialists. LinkedIn data shows that the demand for recruiters peaked in January 2022, reaching nearly five times pre-pandemic levels. Although the demand has stabilised somewhat, it remains significantly higher than before the pandemic.
Globally, the trend is similar, with demand for recruiters at nearly four times the pre-pandemic rate in April 2022. This highlights the broader challenges employers face in filling positions.
Competing with Larger Companies
Small and medium-sized enterprises (SMEs) in Singapore, which make up 99% of all businesses and employ 72% of the workforce, face the added challenge of competing with larger corporations that often have more resources. SMEs must adopt more flexible, skill-focused recruitment strategies to stay competitive in attracting and retaining talent.
Adapting Hiring Strategies
To succeed in today’s competitive labour market, SMEs should embrace a skills-first approach to hiring. This means focusing on a candidate’s skills, rather than solely on traditional qualifications like degrees or years of experience. Looking beyond skills, SMEs can also assess candidates for potential, considering qualities like learning agility, a growth mindset, and a willingness to take on new responsibilities.
A 2021 LinkedIn report found that 60% of companies in Singapore are open to hiring candidates from different industries if their skills are a match for the role. Additionally, 39% of companies prioritise technical skills, and 31% value transferable skills over education and minimum experience requirements.
Leveraging Internal Talent
SMEs can also take advantage of internal mobility as a strategy to overcome recruitment challenges. Promoting from within can reduce hiring costs and time, as existing employees are already familiar with the company’s operations and culture. This also fosters employee retention, as companies that excel at internal mobility have retention rates nearly double those of companies that do not.
According to LinkedIn’s Workplace Learning Report, companies with strong internal mobility retain employees for an average of 5.4 years, compared to just 2.9 years for companies with weak internal mobility strategies.
Meeting Employee Expectations
In today’s job market, employees are increasingly looking for more than just competitive pay. Benefits such as flexible work arrangements and opportunities for career progression are highly valued. SMEs are well-placed to offer these benefits, which can enhance productivity, strengthen brand image, and improve retention rates.
Companies that offer flexible work policies report a 40% increase in productivity, a 36% improvement in brand image, and a 36% rise in employee retention.
The Path Forward for SMEs
As the competition for talent intensifies, SMEs must quickly adapt their HR strategies and employee engagement practices. By focusing on skills, internal development, and offering flexible work arrangements, SMEs can successfully navigate today’s labour market and secure the best talent.
