Singapore has been given very high scores for wage pressure in high-skill industries and talent mismatch in a global assessment of the efficiency of skilled labour markets in 31 countries.

The Hays Global Skills Index, produced in collaboration with Oxford Economics and released today, scores Singapore’s labour market against seven indicators, or points of potential pressure. For each indicator Singapore received a score out of 10.A score close to 0 indicates little to no pressure, while a score close to 10 shows severe pressure.

The Index shows that in Singapore, pressure on our labour market comes from five of these indicators. The first is ‘wage pressure in high-skill industries’, which measures the rate at which wages in high-skill industries outpace those in low-skill industries, and for which Singapore received a very high 8.4.

“This score supports what we’re seeing on the ground, namely that wages in high-skill industries are rising much quicker than those in low-skill industries relative to the past,” says Lynne Roeder, Managing Director of Hays in Singapore. “This shows that sector specific skill shortages, such as in engineering and technology, have emerged and employers in such high-skill industries are competing for the top talent.”

But skill shortages in high-skill industries are not the only pressure point. Additional pressure comes from ‘wage pressure in high-skill occupations’ for which Singapore received a score of 5.9. According to Lynne, “This shows that wages for highly-skilled candidates such as managers, senior officials or skilled trades are rising faster than for low-skilled candidates such as process, plant and machines operatives, and administration workers.

“Just as we see in high-skill industries, the high demand but short supply of talent for highly-skilled occupations is leading to wage pressure for suitable candidates.”

As further evidence of this, overall wages are increasing much quicker than historically seen. Singapore’s score for ‘overall wage pressure’ rose significantly from 1.3 last year to 5.8 this year. As Lynne explains, “This huge increase in pressure shows that wages are rising much faster than we have historically seen. This indicates overall labour market tightness as employers attempt to remain competitive in the race for highly-skilled professionals.

“Singapore’s standing as a regional hub for multinational corporations and the sheer number of construction and infrastructure projects bolsters a highly active recruitment market. But Singapore faces a significant talent gap thanks to growing technical skill shortages. Government initiatives that endorse local Singaporean hires for middle income jobs have further exacerbated the shortage of talented locals, as the huge increase in overall wage pressure shows.

“Our advice to employers therefore is to use a range of innovative attraction strategies, not just salary increases, to keep recruitment plans intact.”

Another indicator or pressure point is ‘talent mismatch’, for which Singapore received a high score of 6.0. This shows that the available talent often doesn’t have the skills employers want, leading to both higher rates of vacancies and unemployment.

Finally, Singapore received a score of 5.5 for ‘labour market participation’, suggesting that most of our labour force is already utilised and the available talent pool therefore can’t be increased in great numbers. In other words, we can’t relieve the skills shortage by raising the employee participation rate.

“Given all these pressure points, it’s unsurprising that the overall Index score now stands at 4.7, a 0.6 increase on the year,” said Lynne.

For the remaining two indicators, the Hays Global Skills Index ranked Singapore very positively. Our education system is very well equipped to meet future talent needs (we received 0.7 for ‘education flexibility’) and our labour market legislation is very flexible (0.6 for ‘labour market flexibility’). These are both positives for our labour market since they indicate low pressure points.

About the Hays Global Skills Index
The Hays Global Skills Index assesses the efficiency of the skilled labour market in 31 countries, or its ability to supply skilled labour. The Hays Global Skills Index provides a score for each country of between 0 and 10 which measures the pressures present in its labour market. The score is calculated through an analysis of seven equally weighted indicators, each covering different dynamics of the labour market. Three indicators explore the supply of talent, namely education flexibility, labour market participation and labour market flexibility. One looks at talent mismatch. The final three are wage pressure indicators, looking at overall wage pressure, wage pressure in high-skill industries and wage pressure in high-skill occupations.

A score of 5.0 indicates a balanced picture for labour markets, a score close to 0 indicates less intense competition for vacancies, and a score close to 10 shows severe difficulty in finding skills.

The Hays Global Skills Index report, titled ‘Labour markets in a world of continuous change’, can be viewed at www.hays-index.com. Hays is located in Singapore at Level 27, UOB Plaza 2, 80 Raffles Place, Singapore. Phone +65 6223 4535 or email lynne.roeder@hays.com.sg

Hays, the world’s leading recruiting experts in qualified, professional and skilled people.