More employers planning to freeze headcount in 2026: SNEF survey

Key Concepts

• Headcount Freeze: Employers planning to maintain their current number of employees and not hire new staff.
• Progressive Wage Model (PWM): A framework in Singapore that aims to uplift wages for lower-wage workers through skills upgrading and career progression.
• Skilled Local Staff Shortage: A significant challenge for employers, referring to the lack of available local talent with the necessary expertise.
• Uncertain Business Prospects: Employers' concerns about the future economic and business environment, leading to cautious planning.
• AI and Automation: The increasing adoption of artificial intelligence and automated systems in businesses, with potential impacts on hiring and job roles.
• Workforce Transformation: The process of adapting the workforce to new technologies and business needs, often involving upskilling and reskilling.
• Job Redesign: Modifying existing job roles to incorporate new technologies or skills, potentially leading to increased productivity.
• NWC Guidelines: Recommendations from the National Wages Council in Singapore regarding wage adjustments and employment.

Employer Sentiments and Hiring Plans for 2026

Main Topics and Key Points:

• Increased Headcount Freezes: Close to three in five employers in Singapore plan to freeze headcount in 2026, a significant increase from 50% in 2024. This indicates a growing caution among businesses regarding future uncertainties.
• Reasons for Caution: Beyond manpower costs, approximately 40% of employers cite a shortage of skilled local staff as a major concern.
• Gloomy Outlook for Many Sectors: 72% of employers surveyed report uncertain business prospects, up from 58% last year. This sentiment is driving plans to moderate or freeze wages altogether, with a 10 percentage point increase in such plans compared to the previous financial year.
• Progressive Wage Model (PWM) Impact: Employers of lower-wage workers are largely following PWM guidelines, with almost all planning wage increases for this group. One employer is even bumping up plumber salaries by 10% next year, citing efficiency gains from experienced workers.
• Sectoral Differences in Hiring:
  • Retail Sector: Likely to experience headcount freezes due to uncertainties in changing consumer behaviors and the overall economic environment, despite some recent improvements.
  • Optimistic Sectors: Community and social services, as well as pharmaceutical and healthcare science sectors, are expected to continue hiring. These sectors have sustained demand for manpower that is not easily replaced by machines, requiring human touch for care services.

Supporting Evidence/Data:

• Singapore National Employers Federation (SNEF) survey findings.
• "Close to three in five" employers plan headcount freeze.
• "50% in 2024" for headcount freezes.
• "About 40%" citing shortage of skilled local staff.
• "72% of employers surveyed report uncertain business prospects, up from 58% last year."
• "Almost half of them are planning to moderate or freeze wages altogether."
• "A whole 10 percentage point increase from the previous financial year" for wage moderation/freezes.

Challenges and Strategies for Employers

Main Topics and Key Points:

• Staff Retention and Skilled Talent Shortage: These remain significant challenges for employers.
• Incorporating High Skills: While many segments offer opportunities for upskilling or incorporating high skills, it's not always straightforward. The lack of practitioners in fields like AI means that simply having high skills doesn't guarantee a fit.
• Company Experimentation and Innovation: To effectively build high skills, companies may need to add layers of experimentation and innovation.
• Avoiding Wage Reductions: Some business owners prefer not to reduce wages as a cost-saving measure, unless facing a severe global recession. Instead, they aim to grow staff capabilities and their pay, acknowledging that costs are unlikely to decrease.
• Investment in Workers: Despite the cautious outlook, some employers are willing to invest in their workers to enhance company resilience.

Key Arguments/Perspectives:

• Mr. Tongue's Perspective: Emphasizes the efficiency and speed of experienced workers, justifying a 10% salary increase for plumbers to retain them and ensure job completion. He highlights the cost and time involved in retraining unskilled workers.
• Business Owner's Stance: Prefers to invest in staff capability and pay rather than cutting wages, viewing it as a more sustainable approach to rising costs.

Technical Terms/Concepts:

• Manual Labor: Physical work requiring significant effort.
• Diagnose: To identify the nature and cause of a problem.
• Progressive Wage Model (PWM): A structured approach to wage increases tied to skills and job roles.
• Lower Wage Workers: Individuals in occupations with typically lower remuneration.
• Uncertain Business Prospects: A state of not being sure about future business performance.
• Moderate Wages: To adjust wages to a less extreme or more controlled level.
• Global Recession: A widespread and prolonged downturn in economic activity across the world.
• Macroeconomics: The branch of economics dealing with the large-scale or general aspects of the economy.
• Staff Retention: The ability of an organization to keep its employees.
• High Skill Talent: Individuals possessing advanced knowledge, expertise, and abilities in a particular field.
• Upskilling: Training employees to learn new skills or improve existing ones to meet changing job requirements.
• Incorporating High Skills: Integrating advanced competencies into existing job functions or business processes.
• Practitioners: People who are actively engaged in a profession or practice.
• Company Experimentation: The process of testing new ideas or approaches within a company.
• Company Innovation: The introduction of new ideas, methods, or products within a company.
• Resilient Companies: Businesses that can withstand and recover from disruptions.

AI and Automation's Impact on Hiring

Main Topics and Key Points:

• Increasing Adoption of AI/Technology: The percentage of employers looking to adopt AI or technology within their companies has increased.
• Indirect Impact on Hiring Decisions: While employers may not have explicitly considered AI's impact on manpower demands when responding to the survey, it is a factor in their long-term plans.
• AI as an Enabling Tool: AI is seen as a potential tool for greater productivity, but its impact on hiring is not straightforward.
• Job Displacement and Augmentation: Literature suggests AI may take over repetitive and mundane tasks, potentially leading to job displacement. However, it can also augment worker productivity through job redesign, training, and upskilling.
• SNEF's Support for Transformation: The Singapore National Employers Federation (SNEF) fully supports employers in undertaking business and workforce transformation to leverage AI for increased productivity.

Key Arguments/Perspectives:

• Mr. Halshaw's View: Employers are likely responding to surveys based on broader business environments rather than the immediate impact of AI. However, AI adoption is a growing trend that will influence future manpower demands. He stresses the importance of job redesign and upskilling to harness AI's benefits.

Technical Terms/Concepts:

• AI (Artificial Intelligence): The simulation of human intelligence processes by computer systems.
• Automation: The use of technology to perform tasks with minimal human intervention.
• Manpower Demands: The need for human labor in a company or industry.
• Productivity: The efficiency with which goods or services are produced.
• Job Displacement: The loss of jobs due to technological advancements or other factors.
• Job Augmentation: The enhancement of human capabilities and productivity through technology.
• Job Redesign: The process of restructuring job roles to improve efficiency, job satisfaction, or to incorporate new technologies.
• Upskilling: Training employees to learn new skills or improve existing ones.
• Workforce Transformation: The process of adapting the workforce to meet evolving business needs and technological changes.

Labor Market Outlook and Future Considerations

Main Topics and Key Points:

• Cautious Outlook for 2026: Employers are proceeding more cautiously regarding hiring plans for 2026, influenced by uncertainties in the economic environment.
• M1 Labor Force Survey Findings: The third quarter of the current year showed a surprisingly strong labor market, contrasting with some employer expectations.
• Factors Influencing Future Hiring: The actual outcome for 2026 hiring will depend on economic performance and the emergence of new business opportunities requiring manpower investment.
• NWC Guidelines: Employers are urged to consider the recently released National Wages Council (NWC) guidelines when making decisions about wages and headcount.
• Jobs at Risk from AI: Repetitive and mundane tasks, particularly in administrative roles, are more susceptible to being taken over by AI.
• Potential for Wage Growth: If AI is used to augment productivity through job redesign and upskilling, it can lead to increased wages for workers.

Key Arguments/Perspectives:

• Mr. Halshaw's Assessment: It's difficult to definitively state whether the hiring freeze is a temporary pause or a long-term reassessment. The current caution is a response to uncertainties, and the actual labor market in 2026 will be shaped by various economic factors. He emphasizes that the SNEF survey reflects employer caution, which will influence hiring plans until early 2026 unless business conditions significantly change.

Technical Terms/Concepts:

• Labor Market: The place where employers and employees interact to determine wages and employment levels.
• Softening of the Labor Market: A situation where the demand for labor decreases, leading to potentially fewer job openings and slower wage growth.
• M1 Labor Force Survey: A survey conducted by M1 (likely a telecommunications company in Singapore, but in this context, it refers to a labor market survey) providing data on employment trends.
• NWC Guidelines: Recommendations from the National Wages Council regarding wage adjustments and employment.
• Repetitive Tasks: Tasks that are performed in the same way repeatedly.
• Mundane Processes: Routine and uninteresting tasks.
• Administrative Roles: Jobs focused on office management and support functions.
• Labor Savings: Reduction in the cost of labor.
• Business Outcomes: The results or achievements of a business.

Conclusion/Synthesis

The Singapore National Employers Federation (SNEF) survey reveals a growing sense of caution among employers for 2026, with a significant increase in planned headcount freezes and wage moderation. This sentiment is driven by uncertain business prospects and a persistent shortage of skilled local staff. While employers of lower-wage workers are largely adhering to the Progressive Wage Model, other sectors face a gloomier outlook. The rise of AI and automation presents both challenges and opportunities, with potential for job displacement in repetitive tasks but also for increased productivity through workforce transformation, job redesign, and upskilling. Ultimately, employers are urged to navigate these uncertainties by considering economic conditions, new business opportunities, and the NWC guidelines to make informed decisions about wages and headcount.