Businesses identify manpower and increased costs as core challenges for 2023

The companies indicated that manpower issues are a big concern. ST PHOTO: JASON QUAH

SINGAPORE - Business sentiments have improved for the second consecutive year after the Covid-19 pandemic began, but companies here are becoming more cautious in the new year as recession concerns and business costs rise, said the Singapore Business Federation’s (SBF) latest National Business Survey.

The survey, conducted between Aug 29 and Nov 23, 2022, showed that more than a quarter of the 931 companies surveyed (26 per cent) said they expected the economy to worsen in the next 12 months, compared with 13 per cent in 2022.

Of the 931 companies, 73 per cent were small and medium-sized enterprises, and 27 per cent were large companies.

Almost all the companies surveyed (97 per cent) said they expect inflationary pressures to continue in 2023. Close to a third (32 per cent) indicated they have been negatively impacted by inflationary pressures.

The companies indicated that manpower issues are a big concern. These include rising manpower costs (75 per cent), attracting and/or retaining younger workers (51 per cent), new foreign manpower policies raising costs (48 per cent), a limited pool of local high-skilled labour (47 per cent), and stricter policies that restrict the supply of foreign workers (43 per cent).

Their top cost challenges are wages (79 per cent), logistical costs (52 per cent), overall cost pass-through and procurement costs (both 48 per cent), and utilities (45 per cent).

Businesses said they hope Budget 2023 will support them in addressing costs (74 per cent), manpower challenges (57 per cent), and assistance in cash flow management (48 per cent).

Meanwhile, as part of efforts to manage inflationary risks, businesses indicated they are implementing cost-saving measures (55 per cent), increasing prices of products or services (42 per cent) and renegotiating financial terms with their suppliers and customers (38 per cent).

They also plan to increase salaries (40 per cent), invest more in new technologies (32 per cent), and re-engineer business and operational processes (28 per cent).

Their top priorities are growing revenue (66 per cent), reducing costs (43 per cent) and ensuring positive cash flow (42 per cent).

Three in four have also implemented environmental, social and governance initiatives in at least one area. The top areas are employee health and safety (81 per cent), and fair and equitable employee pay and rewards policy (71 per cent).

Mr Albert Tsui, executive director of SBF’s advocacy and policy division, said: “While business sentiments are generally on an upward trajectory post-pandemic, most Singapore businesses are approaching 2023 with greater caution on the back of heightened cost pressures and continued manpower challenges. Despite these, it is heartening to note that businesses remain committed to transforming and growing their business.” THE BUSINESS TIMES

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