Singapore’s F&B Outlook: Unpacking the Latest Manpower Shortage Dilemma

According to the Ministry of Manpower Singapore’s Labour Market Report for the First Quarter of 2023, the overall labor market displayed sustained growth, with total employment surpassing its pre-pandemic level by 3.8%.

But not all industry sectors are enjoying a favorable expansion in employment. As highlighted in the CNA report, the F&B (Food and Beverage) sector has encountered workforce shortages since the start of 2023, especially during the festive period in January and February 2023.

If we compare the labor market growth data with the situation in the F&B sector, does this mean Singaporeans don’t want to work in the F&B business? 

Looking at data from Enterprise Singapore, the food services sector contributed S$4.5 billion to Singapore’s economy and employed about 235,500 workers in 2022. Just so you know, there are 3,492,851 workers across all industry sectors in Singapore. If you look at the ratio, then there are 7 out of 100 workers in Singapore working in the F&B industry. Not a bad figure, right?

But over time, attraction to working in the F&B business has shifted to a different trend. Based on research on the career and wealth landscape in Singapore published by Blackbox Research in July 2023, Singaporeans believe that a career in the F&B industry is less desirable than it was a decade ago, possibly due to concerns over long working hours, intense competition and perceived instability in the sector.

You might think that if Singaporeans are no longer interested in a career in the F&B industry, then business owners can tap on foreign workers to fulfill the labor needs of their cafes, restaurants or hawkers. But since the number of foreign workers is regulated by the government within a certain quota, business owners are not instantly able to hire people from outside the country.

Why can’t foreign workers solve the manpower shortage problem in the F&B industry today?

The government has a policy to control the number of foreign workers in Singapore, making sure that local citizens have job opportunities. They do this by setting limits (quotas) on how many foreign workers a company can hire. Without these limits, businesses could hire as many foreign workers as they want. 

What is a foreign worker quota anyway? In Singapore, the foreign worker quota system sets limits on the number of foreign employees a company can hire, and these limits are determined by the industry type and the company’s size. 

These quotas are not the same across all sectors of the economy; they vary depending on the industry. For example, the construction sector usually has a higher quota of foreign workers compared to the service industry.

Despite the difference in quotas, why are foreign workers still unable to solve the manpower shortage problem in the F&B industry? The following explanation will help you understand why F&B establishments such as cafes and eateries are facing a manpower shortage and foreign workers do not automatically solve that limitation.

The F&B sector in reality, including cafes and eateries, grapples with a labor shortage, primarily because a considerable number of Singaporeans have no desire to work in this sector due to the long hours and less comfortable working conditions. 

The number of Singaporeans willing to engage in this sector diminishes from time to time as fresh entrants to the job market often possess higher qualifications, potentially rendering them overqualified for positions as servers or kitchen assistants. Meanwhile, older workers are gradually retiring from these roles. Even if there is a higher salary and suitable qualifications, young Singaporeans prefer to work in a more comfortable environment for less pay.

At the end of the day, F&B operators have no choice but to rely on foreign workers. 

However, the Ministry of Manpower (MOM) classifies the F&B industry within the services sector, which encompasses a wide range of businesses, including financial services, infocommunications, transportation, commerce, and hotels. In this sector, there are more competitive positions like those in finance and infocommunications, which, according to some Singaporeans, encounter significant competition from foreign workers. Not to mention that the high competition in this category resulted in spiraling wages, beyond the reach of many in the F&B industry.

With the high competition, F&B businesses will always be the last to be supplied with labor. Even when F&B business owners want to hire more foreign workers, they are faced with a quota of foreign workers set by regulations.

Why manpower shortage is a serious problem for F&B industry?

Manpower shortages pose significant disadvantages, ranging from reduced productivity and increased costs for businesses to negative impacts on communities and economies. Addressing these shortages is crucial to mitigate these disadvantages and ensure sustainable growth and development. 

Let’s take a look at the key disadvantages of manpower shortages for F&B enterprises.

Reduced Productivity

With fewer workers available, businesses may struggle to maintain their usual levels of productivity. This can result in delays, lower output, and decreased efficiency.

Quality of Services

Manpower shortages can lead to reduced quality of services, particularly in sectors like healthcare and education. Longer wait times, overworked staff, and limited resources can negatively impact the care and support provided to individuals.

Increased Workload

Existing employees may be burdened with heavier workloads, leading to burnout, decreased job satisfaction, and higher turnover rates. This can further exacerbate the shortage as experienced workers leave.

Increased Labor Costs

To attract and retain workers in a competitive labor market, employers may need to offer higher wages and better benefits. This can lead to increased labor costs, which can impact a company’s profitability.

Reducing labor scarcity: Actionable approaches to address labor shortages (and their challenges)

Addressing manpower shortages in the F&B industry requires a multifaceted approach. While approaching foreign workers has proven to be a challenge due to quota restrictions, it’s time for business owners to dispel negative perceptions about the job and the work culture surrounding it in order to attract local workers back into the scene. 

Here are some actionable approaches to consider to boost labor interest, including potential challenges that will be faced when implementing it.

• Competitive salary

Salary is a crucial element that potential employees consider when looking for a new workplace. A competitive salary can lure new talent into the F&B sector. Cited from The Business Time, a number of F&B players in Singapore have offered salary jumps, joining bonuses to fight severe labor crunch. 

But the challenge is that this money talks approach to employee salaries is not sustainable in the long run. We know that the lifeline of an F&B business depends on the seasons, where there are low seasons and high seasons. If we continue to incentivize high salaries without any other strategies, the business will suffer, as we all also know that profit margins in F&B are tight.

• Good working culture and perks

More and more workers these days are on the lookout for employers with a great workplace vibe. They want companies that care about their well-being, communicate clearly, offer useful training, and have solid management. 

In fact, a report from 2022 found that 41% of Singaporeans would rather stay jobless than stick with a job that makes them unhappy. It’s not a secret recipe that when employees are happy, they work better and stay longer. 

To create fun and happiness at work, some workplaces offer perks that are very much relevant to their employees’ jobs, such as a bar that provides a drinking session with colleagues at the end of a shift. Or if you watch the popular TV series, The Bear, it often features restaurant kitchen workers having dinner together at the end of their shift as a form of team engagement.

But creating a good working culture and valuable perks is not a simple task. Business owners need to know very well how each employee’s character is in order to come up with an ideal culture that accommodates diversity in the workplace. 

Employees may have diverse values, beliefs, and expectations, which can make it difficult to establish a unified culture that appeals to everyone. Business owners also need to ensure that the culture aligns with the company’s strategic goals and objectives is essential for long-term success.

• Bring new automation technology

Bringing new automation technology to the F&B business can have a transformative impact on efficiency, cost-effectiveness, and customer experience. And in Singapore, there are already several examples of automation technologies being used by food and beverage businesses in their daily operations.

For example, fast food chains and restaurants are adopting self-service kiosks where customers can place orders, customize their meals, and pay without the need for a cashier. Or coffee shops and cafes that use automated coffee machines that can grind coffee beans, brew espresso, steam milk and make complex coffee drinks at the push of a button. All these examples show how automation technology can help reduce dependence on labor. 

While automation in the food and beverage business offers numerous advantages, it also comes with certain disadvantages and challenges. For instance, the implementation of automation technology often requires considerable upfront investment for equipment, software, and infrastructure. 

Not to mention, this automation technology is still at an early state which makes its operational costs still relatively high. Small businesses with limited budgets may find it difficult to adopt automation. Automated systems and machines also require regular maintenance and occasional repairs. Downtime due to maintenance can disrupt operations and incur additional costs. 

And beyond the technical and financial challenges, this new technology approach also has the potential to lose the human touch. Automation can also reduce personal interaction between staff and customers. Some customers prefer human service and may have concerns about machines replacing employees. According to a report cited by CNBC, consumers have mixed feelings about robots in restaurants as one-third of diners don’t want to see robots preparing their food.

• Hire more local part-timers

Hiring more local part-time workers in F&B offers flexibility and cost efficiency, helping to cover shifts and manage labor costs effectively. This approach is common among business owners during the F&B high season. 

The food and beverage industry often experiences fluctuations in customer traffic. With the existence of part-time workers, it allows businesses to adapt quickly to changes in demand, ensuring the right number of staff members are available to provide efficient service without overwhelming full-time staff. Utilizing part-time staff can also help businesses avoid excessive overtime pay for full-time employees, contribute to cost savings, and ensure that staffing costs align with revenue.

However, part-time employees often have limited availability due to other commitments, such as school, other jobs, or family responsibilities. This can make scheduling and coverage difficult, especially during critical working hours.

And most crucially, part-timers may not have the same level of commitment or loyalty as full-time employees, as they may see this work as temporary or transitional. This can affect their quality of service and engagement with the business.

Getting Things Sorted: Tackling Labor Issues with Ease

Feeling a bit overwhelmed, yeah? Well, each of the approaches mentioned above comes with its own set of challenges. If not executed properly, it can leave business owners scratching their heads, dealing with a whole new set of issues.

Hence, we created EngageAny to address the obstacles of each approach above, especially for complex aspects such as automation technology, culture & perks development, and even solutions to add foreign workers. 

On the automation aspect, EngageAny can simplify planning for repetitive tasks such as work shift scheduling through work schedule automation technology available for various shift types in the F&B routines. With this ease, business owners do not need to allocate excessive effort in manual planning and dealing with Excel sheets so they can focus more on operations and hiring new staff.

As for the culture and perks development aspect, EngageAny has a feature where users can share feedback openly with colleagues in the same workplace. This feature encourages open communication and transparency about tasks and related matters in their daily work routine. With open communication, engagement in the workspace will be higher. 

In addition, EngageAny can also be used to implement performance-based rewards into workers’ daily routines. Performance-based rewards are incentives granted to employees in recognition of their work-related contributions to the company, rather than solely based on their length of service. These rewards serve as a tool to inspire and acknowledge employees for achieving specific tasks or goals aligned with your team’s vision and strategy.

Performance-based rewards can also be a solution to optimize the working hours of part-timers. But why should we optimize part-timers’ working hours? 

Ideal composition ratio between local and foreign workers

In order to get the foreign worker quota, we need to meet the ideal composition ratio between local and foreign workers in our place of business. And based on the latest rules from the Ministry of Manpower (MOM) as of September 2023, your quota entitlement only includes local employees who meet the following criteria:

A. Singaporean or Permanent Resident employee earning the Local Qualifying Salary (LQS) of at least $1,400 per month is counted as 1 local employee.

B. Singaporean or Permanent Resident employee earning half the LQS, which is at least $700 but below $1,400 per month, is counted as 0.5 local employee.

With the current situation that it is difficult to find full-time local workers to fulfill the ratio of 1 local employee, we can use part-timers to meet criteria B. How to implement it for part-timers?

Based on criteria B, you get a ratio of 0.5 local employees if there is an employee who earns at least S$700 per month. This means that as long as the part-timer can work 70 hours a month at a rate of S$10 per hour at least, the business owner can meet the 0.5 local employee ratio. Once the ratio for local employees is fulfilled, then the business owner can hire more foreign employees as needed.

EngageAny can help you motivate part-time employees to fulfill their required working hours with performance-based reward challenges. EngageAny has a feature called “Create Your Own Challenge”, which is a challenge module that allows you to make your workplace more engaging for your staff. If they complete the challenge, then your employees will be rewarded with coins that can be used to redeem a number of attractive vouchers.

Follow these steps to create a challenge for part-timers through the “Create Your Own Challenge” feature:

1. Step 1: select “Create New Challenge”

2. Step 2: Fill up the general information for the challenge. Once done, select “Next”.

3. Step 3: Select a Goal Type and Reward Type.

4. Step 4: Publish challenge and track the progress in dashboard performance

Are You Ready With New Ways to Overcome Manpower Shortage?

Prepare yourself to unlock the potential of EngageAny, a unique offering exclusively brought to you by StaffAny! Are you ready to seamlessly integrate the power of EngageAny into your business? Don’t hesitate any further!

Learn more about EngageAny here.