Strategies for Singapore Businesses to Thrive in the Face of Workforce and Inflation Challenges

- All Industries -  |  16 Apr 2024

Today’s dynamic global economy presents both challenges and opportunities for Singaporean businesses. In a fast-paced and interconnected global economy, business leaders face a myriad of challenges and opportunities. Drawing insights from IndSights Research’s business leaders panel discussion on 1 March 2024, this article discusses how Singapore businesses navigate through workforce and cost challenges, exploring factors including Singapore’s inflation rate, the strong Singapore dollar, rising business costs, and a tight labor market. 

BANI can be a framework used to describe the world today as Brittle, Anxious, Non-Linear, and Incomprehensible. While BANI does not tell us what the issues or solutions are, it indicates that our world is delicate, uncontrollable, unpredictable, and impossible to comprehend. Organisations that will survive are those that are agile, and with thriving cultures of learning and collaboration. 

Singapore business leaders are no strangers to navigating challenges. With fluctuating inflation rates, geopolitical tensions, and a shifting workforce demographic, staying ahead of the curve requires strategic foresight and adaptability. In this environment, adaptability and strategic planning are paramount for businesses to not only survive but also thrive. 


READ MORE IndSights Research Business Leaders’ Forum


Singapore inflation, cost pressures and strategies to manage them 

Core inflation in Singapore reached 3.6 percent in February 2024, driven by rising global commodity prices and supply chain disruptions. This inflation rate was higher than expected but was seen to be seasonal partly due to the Chinese New Year. 

Businesses are grappling with the rising costs of raw materials, transportation, and utilities, potentially impacting pricing strategies and profitability. This may necessitate price adjustments, which can impact consumer demand and profitability. Additionally, wage growth pressures are expected to pick up as businesses compete for talent in a tight labor market.  

A strong wage growth can fuel consumer spending, leading to increased demand for goods and services and, subsequently, upward pressure on prices. Combined with inflation, rising business costs due to factors like wage pressures and supply chain disruptions necessitate strategic cost management. 

IndSights Business Forum - Navigating the Business Landscape in 2024 - Economic overview, trends and budget 2024
Discussion on economic overview, trends and on Budget 2024 at IndSights Research’s inaugural Business Leaders Forum

IndSights Research Business Forum discussed the following factors that business leaders must consider when formulating their pricing and investment strategies to manage cost pressures: 

  • Optimising Operations: Businesses may want to identify areas to streamline operations and reduce waste. Implementing lean manufacturing principles, automating processes, and negotiating better deals with suppliers can help reduce costs. 
  • Explore Cost-Saving Measures: Implementing cost-saving measures can free up resources for investment in other areas. Businesses can explore renegotiating contracts, reviewing staffing levels, and finding more efficient office spaces to free up resources for investment. 
  • Pricing Model Adjustments: Strategic pricing adjustments might be necessary to account for rising costs while minimising customer churn and maintaining profitability. 
  • The Strong Singapore Dollar: The strong Singapore dollar presents a temporary advantage for businesses that import goods or machinery. Businesses can use this opportunity to make strategic purchases of equipment or raw materials at a lower cost. However, it is crucial to focus on long-term strategies beyond currency fluctuations. 

READ MORE: Business strategies from our recent Business Sentiment Survey (Oct-Dec 2023)


Geopolitical risks to supply chains and building business resilience 

Geopolitical tensions have significant implications for global markets and supply chains. Conflicts, trade disputes, and sanctions can disrupt international trade flows, increase market volatility, and pose risks to business operations.  

Concerns about economic fallout on the worldwide economy continues because of the inter-connected relationship among economies. Energy continues to be a key component, e.g. Russia provides approximately 10 percent of the world’s oil output, and both Russia and Ukraine are major suppliers of wheat and other agricultural products to various parts of the world.

The rise of protectionist policies and potential trade wars also pose a significant threat to global supply chains. These disruptions may potentially lead to shortages of critical materials, delays in production, and increased transportation costs. Businesses that rely heavily on single-source suppliers are going to be particularly vulnerable. 

Warehouse workers discussing on navigating workforce and cost challenges
Businesses need to be adaptable to various economic. workforce and cost challenges, locally and globally

To proactively manage the business risks, companies must diversify their supply chains, reduce dependencies on single sourcing, and establish alternative sourcing options. Additionally, developing robust risk management strategies and contingency plans can help mitigate the impact of geopolitical uncertainties. 


Building Supply Chain Resilience 

  • Diversifying supplier bases across different regions can mitigate the risk of disruptions from a single source. 
  • Building strong relationships with existing suppliers can help ensure better communication and collaboration during challenging times. 
  • Maintaining strategic inventory levels can help buffer against unexpected disruptions. 


Regional opportunities can help businesses grow 

Despite the global business challenges posed by economic uncertainty, there are growth opportunities in emerging markets, particularly in the Asian region. Factors such as recovering industries, foreign investments, and government support present avenues for business expansion and market penetration. 

Business leaders should carefully evaluate regional opportunities, assess market potential, and develop tailored strategies to capitalise on emerging trends. By leveraging regional advantages and aligning with market dynamics, businesses can position themselves for sustainable growth and competitive advantage. 


Opportunities in Southeast Asia: 

While the global economic outlook remains uncertain, Southeast Asia is expected to be a bright spot. A young and growing population with rising disposable incomes, and rapid technological adoption in Southeast Asia, presents significant market opportunities for Singaporean businesses. 


Capitalising on Regional Growth: 

  • Regional Trade Partnerships: Singapore’s strong trade relationships with its neighbours present a significant advantage. Businesses can explore opportunities for free trade agreements (FTAs) and regional partnerships. 
  • Exploring New Markets and Sectors: High-growth sectors in Southeast Asia, such as e-commerce, fintech, and renewable energy, offer lucrative opportunities for Singaporean companies with relevant expertise. 


Navigating workforce challenges

Singapore’s aging population is leading to a tightening labor market, with potential skill gaps and demographic shifts. Businesses need farsighted workforce transformation strategies, innovative solutions, and practical workforce planning to address these challenges. 

Investing in automation, productivity enhancement, and workforce development is critical for addressing labor challenges and building a resilient workforce. By upskilling employees, embracing technological advancements, and fostering a culture of continuous learning, businesses can attract and retain top talent, and remain competitive in a tight labor market.

Businesswoman conducts employee training class for Singapore businesses to navigate workforce and cost challenges
Employee upskilling is important in today’s ever-changing business environment

Investing in Workforce Development: 

Investing in upskilling programs, attracting regional talent through open immigration policies, and leveraging automation are some of ways for businesses to address labor challenges. 

  • Upskilling Programs: Investing in training and development programs can equip the existing workforce with the skills needed to remain competitive in the face of rapid technological change. 
  • Attracting Regional Talent: Singapore’s open immigration policies can be leveraged on to attract skilled talent from neighboring countries. For example, Singapore has introduced innovative work authorization pathways such as the EntrePass, and the ONE Pass.   
  • Automation and Technology: Businesses can invest in automation and technology to improve productivity and reduce reliance on manual labour. 


Government support can give businesses a needed boost 

Governments play a crucial role in addressing inflation and supporting businesses through various measures and policies. Monetary policies, such as interest rate adjustments and quantitative easing, can influence borrowing costs, investment decisions, and overall economic activity. 

While government regulations and geopolitical risks can shape the business environment, financial support packages and infrastructure investments can stimulate economic growth and mitigate the adverse effects of inflation. Business leaders must closely monitor these developments and adapt their strategies accordingly. 


Leveraging Government Support in Singapore 

In Singapore. the government offers various initiatives to support businesses, including some which were announced in the Singapore Budget 2024. Anecdotally, some businesses that IndSights has spoken to shared that they would not have adopted certain digital systems or tech solutions, had it not been because of certain support programmes, attests to the role of a financial support in giving companies a needed nudge.  

Some support packages include: 

  • Productivity Solutions Grant: helps businesses defray the costs of adopting automation and technology to improve productivity. 
  • Enterprise Development Grant: supports business projects in innovation, research and development (R&D), and internationalisation. 
  • Investment in Artificial Intelligence (AI): More than S$1 billion will be invested into AI computing, talent, and industry development, and part of the investment will be used to secure access to the advanced chips crucial to AI development and deployment. 
  • Refundable Investment Credit (RIC) – a tax credit with a refundable cash feature to support high-value and substantive economic activities will be launched. To support the RIC, the National Productivity Fund and Financial Sector Development Fund will both be topped up by S$2 billion in 2024. Another S$3 billion will be invested in the Research, Innovation and Enterprise 2025 plan. 

READ MORE: Business Resources

By leveraging various support measures, businesses can free up resources for strategic investments and enhance their long-term competitiveness.


Adaptability and resilience are keys to long-term success 

Singaporean business leaders face a complex economic environment with both workforce and business challenges and opportunities. Navigating economic uncertainty requires strategic foresight, adaptability, and proactive risk management.  

Asian business team discussing how businesses can navigate workforce and cost challenges in an office
Singapore companies need to understand workforce and cost challenges, adapt and strategise to stay ahead of the curve

IndSights Research’s Business Forum proposed that by understanding inflation trends, leveraging government support, and identifying regional opportunities, business leaders can position their organisations for success in a dynamic and ever-changing business environment. Moreover, addressing workforce challenges and embracing innovation are essential for sustaining long-term growth and competitiveness.  

While business leaders do well to strategise for the long-term, it helps to be opportunistic, e.g. taking advantage of the strong Singapore dollar while it lasts. In navigating a BANI world, agility, adaptability, resilience and the ability to learn, will be key attributes for driving sustainable success and adopting a forward-thinking mindset. 

Do you have additional feedback? Sign up to discuss industry-related issues in our future roundtable networking sessions via: our registration link or via email 


This article is contributed by Moses Ku, Senior Research Manager, IndSights Research.

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