Singapore’s Employment and Salary Outlook for 2023: What Are the Headwinds and Industries That Might Be Affected?

28 February 2023

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Our job market may look healthy, but there are headwinds on the horizon for Singaporean employees and jobseekers.

  • There are indicators that Singapore’s labour market is slowing down due to global inflation and economic factors

  • Some unevenness in employment and salary growth may emerge across sectors

  • For workers at all levels, capability development is the surest solution

Without sugar-coating it, there are three significant headwinds affecting Singapore’s job market outlook.

  1. The global economic downturn where the cyclical changes will reduce employment opportunities.

  2. The ongoing pandemic crisis is still uncertain in its trajectory and may linger on for some time.

  3. Technological disruptions, particularly digitalisation, will continue to induce structural changes that make jobs and skills redundant.

That said, it’s not entirely all doom and gloom for local employees and jobseekers, though there are indicators that Singapore’s labour market is slowing down with economic growth numbers.

According to figures released by the Ministry of Trade and Industry (MTI) in November 2022, Singapore’s economic growth is expected to slow to 0.5 to 2.5% in 2023, due to global uncertainties, down from the projected 3.5% growth in 2022.

Singapore’s Ministry of Manpower revealed in an October 2022 report: “In the coming months, a deteriorating global economic environment, higher global inflation, as well as geopolitical tensions could affect the labour market outlook.

“Some unevenness in employment growth may emerge across sectors”, they elaborated. On the numbers front, there was a “slight uptick” in unemployment rates, and a rise in retrenchments, though both remained on par with pre-Covid levels.

What’s the big picture that affects Singapore’s job market outlook?

Arturo Bris, Professor of Finance and Director of the IMD World Competitiveness Centre Switzerland, shared his take with Workipedia by MyCareersFuture: “From the economic standpoint, there are two main uncertainties.

“The first one is the global economic crisis caused by the invasion of Ukraine and the disruption of global supply chains.

“Its effects on inflation and growth are heard everywhere, including Singapore. As an economy that relies on foreign trade, it is extremely sensitive.

“The second uncertainty pertains to China and the negative worrying signals from the Asian giant. In particular, there are concerns about the growth prospects of China and its preference to grow its domestic market instead of relying on neighbouring countries.”

Which Singapore hiring industries could see headwinds in 2023?

In fact, according to a Business Times report, Maybank analyst Chua Hak Bin noted that many sectors, such as hospitality, construction and healthcare, are still experiencing acute labour shortages.

For Singaporean workers, recent employment number gains came from industries such as information and communications, professional services, and financial services.

However, the MOM report states that administrative and support services saw a sustained decline, “partly reflecting the gradual scale-back of Covid-related occupations”.

MTI also reported that weaker economic sentiments would weigh on the growth of outward-oriented sectors in Singapore, such as our electronics and chemicals clusters.

That said, the ministry expects that Singapore’s strong recovery in air travel and international visitor arrivals will continue to benefit sectors related to aviation and tourism. This includes air transport, arts, entertainment and recreation, and consumer-facing sectors like food and beverage services.

Lifting of travel restrictions in Singapore and the region has also boosted the recovery of the professional services sector.

Professor Lawrence Loh, from NUS Business Schools’ Department of Strategy and Policy, said to Workipedia by MyCareersFuture: “In view of the international economic outlook, particular industries in Singapore like manufacturing and financial services will be significantly challenged due to weaker demands in 2023.

“While industries affected by the pandemic such as aviation and travel have been recovering, these have to be continually on the alert for any unexpected new twist in the situation.

 “Moving into next year, as always, technology will almost always have impacts on organisational structures and products, as well as individual jobs and skills.”

“This will happen across a broad spectrum of industries, particularly those that are manually driven such as retail, hospitality and even financial services.”

What about 2023 salaries, then?

2023 looks to be a mixed bag when it comes to salaries, according to Mercer’s recently released Total Renumeration Survey (TRS).

The flagship annual compensation and benefits benchmarking study identifies key remuneration trends and predictions for hiring and pay for 2023. Over 1000 Singapore-based companies participated in this year’s survey.

While local employers anticipate salary increases in 2023 to surpass pre-pandemic levels, inflation is also depressing sentiment, with more than half of the companies in Singapore (54%) adopting a wait-and-see approach to their salary budgets.

“Employers remain cautious about bumping up wages to match inflation,” said Mansi Sabharwal, Reward Products Leader at Mercer Singapore. “And many are turning to less permanent solutions such as benchmarking competition to stay competitive in the market (70%), focusing on total rewards communication (69%) and increasing wages of lower-income employees (55%).”

Some other key findings from Mercer’s report on salaries revealed which industries could have the highest salary increments as below:

  • Logistics: (4.4%)

  • Banking and Finance (4.27%)

  • Tech (4.06%)

  • Real Estate (3.25%)

The aerospace industry is also forecasted to see improvement, with salary increments expected to rise from 3.09% to 3.52% in 2023, given global travel continues to gain momentum in the aftermath of Covid-19.

Working in an industry that might slow down? Here’s some advice

Associate Prof. Trevor Yu, from the College of Business’ (Nanyang Business School) Division of Leadership, Management & Organisation, shared the below advice:

  • Take a proactive look at your current skill set and project what areas you need to develop and upskill in the next few years.

  • Consider also whether it is time to explore other options in faster-growing sectors like those listed above and what steps are needed to reskill for possible career changes and transitions.

  • Finally, how much meaning do you derive from your current job role? Do you feel engaged both physically and psychologically? What steps can you take to craft or negotiate a better situation at work so that you can give the best that your talent can offer?

Prof. Loh concludes: “There are two perennial challenges for jobs – creations and displacements – both of which will be critically influenced by the job market headwinds.

“For organisations, especially those more vulnerable to the headwinds, continued transformation is the way forward – it is key to constantly adapt, innovate and strive for resilience.

“As such, no skill will remain relevant forever – in fact, the shelf life for skills is getting shorter and shorter.

“For workers at all levels, capability development is the surest solution – it is imperative to always upskill and reskill!”