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Singapore Business Federation released its quarterly business sentiment survey yesterday (Aug 28) and it shows caution setting in the local economy.
While views on Donald Trump’s disruptive tariffs have improved since Apr, with 59% of participating companies signalling negative exposure vs. 81% in Q1, the overall Business Sentiment Index declined from 56.5 to 55.4 points.
A third of all businesses are dissatisfied with the global economic climate—nearly three times as many as those who express satisfaction. Those sentiments are slightly better for ASEAN, but since the global economy is interconnected, the international situation is certainly going to impact regional realities as well.
Manpower challenges
65% of all respondents highlighted manpower costs as their main business challenge, although that particular metric has dropped from 75% in 2024—perhaps a sign of inflation easing in other areas, relieving some of the burden.
Neverteless, 41%—up by five points from 36%—say they intend to freeze the wages in the next 12 months, including 43% of SMEs. If you’re working in a larger company, you may worry a bit less, as only 28% have such plans (although that is still 11 percentage points more than in the previous year).
There is also some good news for lower wage workers—two thirds (66%) of their employers are actually planning to bump their pay over the coming year. So, if you’re on the lowest rungs of the pay ladder, your outlook is actually better than everybody else’s.
Hiring outlook
In addition to a slowdown in remuneration growth, fewer companies are planning to hire as well (36% vs. 40% in 2024). Of course, it depends on the sector of the economy, as general averages are rarely reflective of the situation in different industries.
Please note that the figures below are not percentages but an index, whereby 50 is the middle value. The higher it is the more positive the outlook and vice versa.
Fortunately, while fewer companies are looking to recruit, fewer are also planning to lay people off—only 9% compared to 12% in 2024, reflecting caution rather than panic in the economy.
And if you’re looking for a job, how could you improve your chances? Sadly, lower your pay expectations, unless your skills and experience are uniquely valuable.
Among different age groups of the potential hires, young graduates are creating the most challenges for their employers. 58% of companies highlight their limited practical work experience, 55% point to insufficient industry knowledge and 53% cite lack of skills.
At the same time, 55% say that young candidates have excessive expectations about their compensation, i.e. they think they should be paid more than the company is able to.
To be fair to them, though, this problem is highlighted by employers also in regard to older candidate groups—65% for mid-career employees and 46% for mature workers, aged 50 and over.
So, while it may seem that young bucks think they’re worth more than they are, it’s really true of everybody. At the end of the day, both employers and employees care about the money first.
Uncertain times
The good news is that there currently are no concrete, fundamental threats to the local economy and the cautious responses of Singapore-based businesses reflect broader uncertainty as everybody is waiting to see what the real impact of Trump’s tariffs is.
Most are expecting it to be negative, just that they’re not quite sure how bad it may be.
It’s to no surprise, then, that more companies are holding off pay raises and hiring. The doomsday scenarios of a global recession have not materialised, but there’s no saying as to how the new international supply chains are going to look like in a few months and who is going to be suffering the most.
While it shouldn’t be Singapore, local businesses have interests in many different countries, and so, each of them may find itself in an entirely incomparable situation.
However, if major disruptions can be avoided, we can then expect more optimism to return in the next few months.
- Read other job-related articles we’ve written here.
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