Singapore firms delay workforce changes despite rising energy costs: Study

Businesses in Singapore are holding back on workforce changes even as soaring energy prices push operating costs sharply higher, according to a new poll by the Singapore National Employers Federation (SNEF).

The snap survey gathered responses from 210 companies across manufacturing, services and construction, including both small and medium-sized enterprises and large corporations. The findings point to widespread cost pressures, but also a cautious and measured approach from employers when it comes to workforce decisions.

Nearly all respondents, 96 per cent companies reported increased operating costs due to elevated energy prices. Around 60 per cent said these costs had risen by more than 10 per cent, driven largely by higher spending on utilities and fuel, alongside increases in materials, supplies, and freight.

Businesses noted that the impact of energy costs extends beyond direct expenses, creating ripple effects across supply chains. Higher prices for raw materials, logistics and transportation are further squeezing margins, particularly against a backdrop of softer consumer demand. Companies in sectors such as hospitality, food and beverage, and retail also flagged rising temporary labour costs as part of the broader cost escalation.

Despite these pressures, 83 per cent of firms said they have not implemented workforce or workplace changes. The SNEF said this indicates that most employers are prioritising operational efficiencies and cost management strategies before taking steps that directly affect employees.

SNEF noted that this suggests companies are prioritising internal adjustments before taking steps that directly impact employees. “These are largely calibrated responses aimed at managing costs while preserving jobs,” the federation said.

Among the 17 per cent that have made adjustments, the most common response has been hiring freezes or delayed expansion plans. Other measures include staff redeployment and cross-training, reductions through natural attrition, and cuts to bonuses, allowances or working hours. These moves, the federation noted, reflect “calibrated responses” aimed at preserving jobs while managing financial strain.

Looking ahead, sentiment remains cautious. About 39 per cent of respondents expressed a negative outlook for the next six to 12 months, citing not only cost pressures but also ongoing disruptions to global trade and supply chains, which are influencing investment decisions.

Employers are increasingly calling for targeted government support if energy prices remain elevated. Key priorities include tax relief or financing assistance, energy subsidies, and delays to manpower policy changes that could further increase costs.

SNEF chief executive Hao Shuo said employers remain concerned about rising manpower expenses compounded by energy driven cost increases. He urged policymakers to consider current economic conditions when implementing upcoming foreign manpower policy changes, and called for enhanced support under the Progressive Wage Credit Scheme to help businesses raise wages for lower-income workers.

The findings highlight a delicate balancing act for employers in Singapore—managing escalating costs while striving to maintain workforce stability in an increasingly uncertain economic environment.