Is Singapore Getting too Expensive for Hiring?

[raptor_from_vietnam]

I just read an article on the current unemployment of the latest batch of graduates from the 4 local universities. It is now at 20%, which is the highest in recent history. As usual, many locals blame it on foreigners working here. You know, the "FT steal our jobs" "PAP opens floodgate" kind of arguments. But I think that is a very unproductive way to look at it. Truth be told, anyone on EP would know it has gotten a lot harder for companies to hire foreigners at the moment. Many companies would tell applicants outright that due to the more stringent landscape, they will only consider those who have "the right to work" in Singapore (euphemism for PR, SC and their dependents). So the issue is definitely not with the foreigners here. The jobs themselves are going overseas. When talking to my friends across multiple industries, they all say many of the functions which used to be in Singapore are now moving out to cheaper locations like India, China, Malaysia, Philippines and even Thailand/Vietnam. Surely Singaporean graduates are of higher caliber in general. But they are not 3x or 5x better to command the 3x to 5x salaries compared to those in low-cost regions. Even in those low-cost countries nowadays, you can often find candidates with degrees from the US/UK/Australia. Even South Korea is cheaper than Singapore, and the Koreans work harder and complain less (from my experience working in a regional function). With the rise of AI, and the general cost-cutting trend in many companies across different sector, it has become too hard to justify the high cost of manpower here. This is the problem that Singaporeans in general are not willing to acknowledge, I feel. It is much easier to blame the "FT". But for the new graduates here, I understand why they want high salaries as well. The houses, the cars, and everything have gotten a lot more expensive. So they expect a high salary to be able to afford those. To be honest, I do not see a happy ending in this. What do you guys think?

[malcontent]

There are always going to be structural changes to any economy over time and Singapore has always found a way to reinvent itself. I am more worried about countries with much larger populations… the sheer number of jobs they need to sustain themselves is hard to imagine.

I think the bigger question for Singapore: how the limited space in Singapore can be optimized for the right kinds of jobs that maximize national output (highest value add). After living in the U.S. since the start of this year, Singapore labor seems relatively cheap by comparison.

There are always going to be some jobs that must be located in Singapore — especially decision makers and their underlings — physical presence is required in order for companies to reap the lower tax rate… foreign tax authorities are always hungry for a bigger slice.

[NYY1]

In general, it's no different than it has always been; you better be moving up the value chain or you are at risk of being left behind (and this may get worse in the coming years).

Over the last decade or so, the higher end opportunity set here has increased quite a bit, which is consistent with what is talked about above and in another post.

A challenge everywhere is that the army of graduates expects X, Y, and Z based simply on their degree. I think even the recent crop of Harvard MBAs has struggled to find what they are looking for [insert joke about MBAs here now].

At the same time, no place is immune from competition or the need to improve/change.

[raptor_from_vietnam]

I agree that it is beneficial for Singapore to try moving up the value chain. But not everyone can be a "decision-maker" here. You can't have the whole population working as regional managers/directors or top-of-the-game technical leads. That is especially true for the young fresh graduates.

[NYY1]

I agree that it is beneficial for Singapore to try moving up the value chain. But not everyone can be a "decision-maker" here. You can't have the whole population working as regional managers/directors or top-of-the-game technical leads. That is especially true for the young fresh graduates.

Part of the issue may be that the university participation rate has increased over time. During tough times, it will be challenging for the marginal graduate.

It's a common belief (in many places) that just educating people to a certain level will make them more productive or worth a salary of $X. That experiment has failed elsewhere, but I guess we can keep running it over and over in new locations to see if the results are any different.

[the observer]

I just read an article on the current unemployment of the latest batch of graduates from the 4 local universities. It is now at 20%, which is the highest in recent history. As usual, many locals blame it on foreigners working here. You know, the "FT steal our jobs" "PAP opens floodgate" kind of arguments. But I think that is a very unproductive way to look at it. Truth be told, anyone on EP would know it has gotten a lot harder for companies to hire foreigners at the moment. Many companies would tell applicants outright that due to the more stringent landscape, they will only consider those who have "the right to work" in Singapore (euphemism for PR, SC and their dependents). So the issue is definitely not with the foreigners here. The jobs themselves are going overseas. When talking to my friends across multiple industries, they all say many of the functions which used to be in Singapore are now moving out to cheaper locations like India, China, Malaysia, Philippines and even Thailand/Vietnam. Surely Singaporean graduates are of higher caliber in general. But they are not 3x or 5x better to command the 3x to 5x salaries compared to those in low-cost regions. Even in those low-cost countries nowadays, you can often find candidates with degrees from the US/UK/Australia. Even South Korea is cheaper than Singapore, and the Koreans work harder and complain less (from my experience working in a regional function). With the rise of AI, and the general cost-cutting trend in many companies across different sector, it has become too hard to justify the high cost of manpower here. This is the problem that Singaporeans in general are not willing to acknowledge, I feel. It is much easier to blame the "FT". But for the new graduates here, I understand why they want high salaries as well. The houses, the cars, and everything have gotten a lot more expensive. So they expect a high salary to be able to afford those. To be honest, I do not see a happy ending in this. What do you guys think?

https://www.storagenewsletter.com/2023/ ... d-factory/

I remember back in early 2000s, many cab drivers were formerly managers in those disk drive factories. Retrenched.

So yea. Here we are today.

[raptor_from_vietnam]

Today, CNA Insider aired an episode of Talking Point on Youtube on Unemployment in 30s in Singapore. In the interview, it was mentioned that the interviewees' roles were made redundant as their teams in Singapore were dismissed. Most comments (from the locals I suppose) are directed at foreign talents as usual, while the CNA themselves are trying to attribute it to Artificial Intelligence. None of them accepts that Singapore is getting less competitive as a destination for hiring. I work with a global team across all regions of the world, so I know for a fact that salaries here are very high, often only lower than the US and Switzerland. Even the Europeans are often paid less. My company can easily find staff in China or Malaysia at 1/3 the price, 80% the quality and 200% the drive. The longer Singapore ignores this, the worse it will get.

Link to the youtube video:

[malcontent]

My former employer has over a 1,000 people employed in Singapore. My division had around 25, and despite having a few team members in India, Australia, Japan and China, whenever someone outside Singapore left, they were replaced by someone in Singapore.

Why? It all started because we had to fulfill target numbers of employees in order to maintain a favorable tax rate, so a directive was sent out to all divisions to get headcounts up. We even replaced a position that was vacated in Europe — but they still had to cover territories in our European theater from here.

Later on this was bolstered Post-COVID, in an effort to drive “return to the office” and leverage all synergies of face to face interactions, there was a push to establish “hub locations” where resources could be concentrated — this further drove us to consolidate in Singapore.

But, that is not to say that all divisions have seen the same fate, large chunks of IT and accounting functions have moved out, much to India, and that reduced our numbers in Singapore (and there was a noticeable drop in quality), but headcount growth in other divisions has made up for it, mostly higher value-add positions.

One noticeable change in our office in the past 8-10 years was the increase in the number of manager offices which take up the space of around 6-8 cubicles. But all-in-all, our office spaces almost doubled in the early 2000’s and it is now at full capacity. In fact, renovations are taking place this year and that includes “hot desk” arrangements to maximize the use of space — however, that goes against the latest corporate directive of coming in 5 days a week, so I believe it will only apply to frequent travelers.

[the observer]

Today, CNA Insider aired an episode of Talking Point on Youtube on Unemployment in 30s in Singapore. In the interview, it was mentioned that the interviewees' roles were made redundant as their teams in Singapore were dismissed. Most comments (from the locals I suppose) are directed at foreign talents as usual, while the CNA themselves are trying to attribute it to Artificial Intelligence. None of them accepts that Singapore is getting less competitive as a destination for hiring. I work with a global team across all regions of the world, so I know for a fact that salaries here are very high, often only lower than the US and Switzerland. Even the Europeans are often paid less. My company can easily find staff in China or Malaysia at 1/3 the price, 80% the quality and 200% the drive. The longer Singapore ignores this, the worse it will get.

Link to the youtube video:

I think China and Malaysia is cheap. Even India is cheap.
Graduates there having a hard time finding a job as well though.

[NYY1]

There's likely truth to both narratives being pushed in this thread. Yet, as in many situations, both sides are probably anchoring to what they've seen (or the conclusion they've already arrived at) and are 100% convinced they are right.

A company's decision on where to hire is likely influenced by how much pricing power they have (and total headcount will be shaped by the company's growth trajectory). Look at two of the industries that have grown parabolically here over the last five to ten years? These industries pay a lot and there's no indication that the wage level is a deterrent to hiring more people. Same for the regional leadership teams that have been relocated here since the pandemic.

At the same time, businesses are always looking to see what can be done more efficiently elsewhere. Likewise, not everyone is (or can be) in a strongly positioned industry/company. It comes back to the idea that one needs to be moving up the value chain or they are at risk of being left behind. Underemployment exists in many places (even the strongest, highest paying ones), and it has as much to do with the productivity/value of different segments of the workforce.

[the observer]

I don’t disagree with OP that Singapore is expensive.

I have seen it over and over, industries getting shipped out of here based on cost pressures. If it wasn’t so, this island would have still remained as it is, a toy making hub as it was in the 70s.

Let it run its course.

The strong currency has its purpose. Food inflation.

P/S
To the OP, also, from first hand experience. Being 80% is not good enough. To win a job, a project, or anything cherished, winner takes all. No prizes for being 2nd.

[malcontent]

One of my favorite sayings when it comes to jobs…

“there is no such thing as job security, only marketability”

[haspu]

I think it is not really about foreigners but more about how companies are moving jobs overseas or automating them. Singapore’s labour costs are high while productivity growth has slowed, so the gap is harder to justify. For fresh grads it may be better to aim for roles that are less likely to be offshored, like client-facing jobs or sectors Singapore is focusing on such as finance, healthcare, or green tech.

[raptor_from_vietnam]

I think it is not really about foreigners but more about how companies are moving jobs overseas or automating them. Singapore’s labour costs are high while productivity growth has slowed, so the gap is harder to justify. For fresh grads it may be better to aim for roles that are less likely to be offshored, like client-facing jobs or sectors Singapore is focusing on such as finance, healthcare, or green tech.

Yup, I wasn't talking about foreign work visa holders in Singapore. I was talking about offshoring. The productivity was not much higher than overseas to justify the big gap in compensation. Also, automation plays a part, like you said. But there is a stronger incentive to automate in Singapore than overseas, because the pay here is higher. So it all ties to 1 problem, like you said: the labour cost vs the productivity.