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Finding qualified and skilled employees has become one of the many challenges faced in talent acquisition for Asian nations. Plenty of these nations face ageing workforces, skills mismatch, expanding technology, software development, research, and other high-skill industries. This talent crunch impacts companies and industries across sectors, hindering performance, competitiveness and overall economic growth.
To address talent needs strategically, businesses must understand the local job market landscape to develop solutions. This article examines the talent acquisition situation in key Asian markets: Singapore, Hong Kong, Malaysia, Japan and the Philippines. It also closely examines hiring challenges faced in talent acquisition in these countries to aid employers who need talent solutions.
By the end, we hope to give you a good understanding of the situation and equip you with the knowledge to evaluate your options, make informed decisions, and ultimately, chart a course towards sustainable growth and competitiveness in the face of talent acquisition challenges.
Unpacking the talent shortage crisis across Asia
As mentioned above, Asia faces major talent acquisition hurdles that threaten lasting impact. Unless public-private initiatives prioritise talent development and recruitment, the crisis will continue to hinder Asia’s global competitiveness. Let’s dive into what’s causing this talent crisis and how it’s impacting the region.
Understanding the scope
A talent shortage is when employers face challenges finding skilled and qualified employees to fill vacant positions in their organisations. Asia is experiencing this across many industries and countries in the region.
Startups, in need of engineers and data scientists, find this shortage especially challenging. Despite recent tech industry layoffs, the demand for skilled professionals remains high, posing significant recruitment and retention hurdles.
A study by Korn Ferry predicts a labour shortage in the Asia Pacific region, with an expected deficit of 12.3 million workers by 2020, ballooning to 47.0 million by 2030. This could result in a $4.238 trillion annual opportunity cost, impacting the finance, technology, and manufacturing sectors.
To fully grasp this crisis and its economic impacts, examining key Asian nations like Singapore, Hong Kong, Malaysia, Japan, and the Philippines provides essential insights. According to the Organisation for Economic Co-operation and Development (OECD), each location presents distinct challenges:
- Singapore grapples with specialised skill gaps in AI, cybersecurity and fintech.
- Hong Kong navigates political uncertainty yet attracts talent for finance and professional services.
- Malaysia boasts educated youth but high underemployment, signalling training needs.
- Japan confronts demographic decline, spurring immigration reforms.
- The Philippines’ growing economy still needs infrastructure and technical expertise boosts.
Analysing each country’s distinct challenges spotlights tailored solutions to the talent crisis. Policymakers, educators and employers can then craft targeted strategies addressing national circumstances while promoting regional growth. Collaboration will be critical to elevate technical abilities, bridge skill gaps, and draw talent globally.
The role of ManpowerGroup’s employment outlook survey
The ManpowerGroup Employment Outlook Survey is pivotal in understanding the global employment landscape. It offers invaluable insights into employer intentions and the overall health of the job market across various regions. Conducted with over 40,000 employers in 41 countries, this survey provides a comprehensive view of hiring trends, showcasing the anticipated changes in workforce numbers for the upcoming quarter.
By calculating the Net Employment Outlook (NEO) — the difference between the percentage of employers expecting to increase staff levels and those planning to decrease — the survey clearly indicates employment trends. With a global NEO of 26% for Q1 2024, the survey highlights a generally positive hiring intention among employers worldwide, despite a slight decrease from the previous quarter. This figure is instrumental in gauging employers’ confidence in their economic prospects and willingness to invest in new hires.
The survey also sheds light on the pressing issue of talent scarcity, with 75% of employers globally reporting difficulties finding the necessary skills. This survey aspect is crucial for understanding the sectors and regions most affected by talent shortages, enabling policymakers, educators, and businesses to devise targeted strategies to address these gaps.
The ManpowerGroup Employment Outlook Survey provides governments and institutions with the data needed to support employment growth and skills development by offering a detailed breakdown of hiring expectations by country, industry, and company size.
Country-specific analysis
In this section, we’ll take a closer look at how different Asian countries deal with the challenge of finding the right talent. We’ll focus on Singapore, Hong Kong, Malaysia, Japan, and the Philippines. Each place has its own way of tackling the problem, and by looking at each one, we can learn more about what works and what doesn’t.
Singapore: Upskilling to bridge the talent Gap
Singapore is tackling its talent shortage by focusing on upskilling its workforce. Through government initiatives and business investments, the country is enhancing the skills of its people to meet the demands of a rapidly evolving job market.
- Post-pandemic employment in Singapore rose by 226,700, exceeding pre-pandemic levels by 2.9%. Despite sector-specific retrenchments, this growth indicates a strong recovery and a stable hiring outlook.
- Sectors like financial services, information & communications, and professional services have seen an uptick in hiring locals, though manufacturing faces challenges due to global economic slowdowns.
- The Singapore government has also initiated the following to boost jobs:
- Progressive Wage Model (PWM) expansion: Aimed at increasing wages for lower-paid workers across various sectors, enhancing their employment prospects.
- Subsidised training and job search support: The government offers subsidised training, improved job search arrangements, and revises visa eligibility criteria to lessen dependence on foreign labour.
- Wage increases and worker well-being: Efforts to raise wages in lower-paid sectors and improve the conditions for migrant workers are part of a broader strategy to create a more inclusive and equitable labour market.
Upskilling and job transformation: The emphasis on upskilling in Budget 2024, alongside job transformation maps and career matching services, highlights Singapore’s commitment to equipping its workforce for future challenges.
The shift in recruitment trends
Singapore’s recruitment landscape has changes that reflect broader global trends and address specific challenges. This shift towards more deliberate hiring practices is characterised by several key trends:
- Preference for contract tech workers allows flexibility amid market shifts.
- Remote work expands talent pools and work-life balance.
- Diverse hiring enhances innovation and resilience.
- Demand for data, AI and cybersecurity skills has intensified with digital transformation.
- Healthcare seeks tech talent to improve care through innovation.
- Attractive offers target design and engineering experts, underscoring semiconductors’ strategic economic importance.
These trends show hiring in Singapore becoming more strategic, flexible, and open. For Singapore’s workers, this means chances to always learn new skills, use the latest tech, and use their special talents in a changing job market. This focus should build a strong talent pool that can withstand global problems and promote long-term economic growth.
Hong Kong: Navigating through persistent challenges
Hong Kong’s ongoing talent challenges are largely due to political uncertainty and economic changes. This part looks at how Hong Kong tackles these problems.
Analysis of the talent shortage
Hong Kong faces a significant talent shortage, with 74% of employers reporting difficulties in finding skilled workers. This challenge has increased salary demands, contributing to wage pressures and potentially impacting productivity. The city has also experienced a notable workforce decline, with 210,000 individuals leaving between 2019 and 2022, driven by emigration and the search for better pay and work-life balance.
Employers are responding by improving remuneration packages, investing in employee development, and considering automation to reduce reliance on manual labour. Recruiting from the Greater Bay Area is also seen as a temporary solution.
The Hong Kong government is actively working to attract high-quality talent through initiatives like the Top Talent Pass Scheme, aiming to alleviate the talent crunch and maintain Hong Kong’s global economic competitiveness. Addressing this talent shortage is crucial for Hong Kong’s future, requiring a focus on education, training, and effective talent strategies.
The effectiveness of current strategies
Apparently, there has been a slight decrease in Hong Kong’s talent shortages, indicating current strategies are working. While over 75% of employers still report gaps, signalling persisting challenges, early gains suggest focused efforts to incentivise and develop skilled talent hold promise if sustained and expanded.
Tight collaboration between stakeholders must build on initial progress made in alleviating shortages. Continued partnership between employers, agencies and training programs remains vital to navigating and mitigating hiring difficulties.
Malaysia: Addressing the skills mismatch
In Malaysia, the mismatch between workers’ skills and what employers need is becoming increasingly apparent.
Addressing this issue is now a priority, with efforts to ensure that the workforce’s skills align more closely with the demands of modern industries.
Skills mismatch and industry demands
In Malaysia, about 42% of job seekers on the national job portal struggle with not having the skills employers seek. The government is tackling this by introducing programs to better match graduates’ skills with what industries need, focusing on digital and soft skills, which are seen as crucial by 65% of Malaysian workers.
Despite these efforts, the challenge remains, with a predicted shortage of nearly 94,000 highly and mid-skilled workers by 2030. Recognising the urgency, Malaysia is implementing policies to prevent this talent crunch, aiming to ensure the workforce’s skills keep up with the demands of a rapidly changing job market.
Government and private sector initiatives
The Malaysian government and employers are implementing various initiatives to address skills mismatches and develop local talent:
- Career development programs and financial incentives aim to bridge graduate skills with industry needs.
- Reskilling and upskilling drives via agencies like the Human Resource Development Corp (HRDC) and Social Security Organisation (Socso) to target the existing gap.
- Partnerships facilitate internships and on-the-job training to boost employability.
- Education policy reviews adapt the curriculum to meet current job realities.
- Calls for quality assurances ensure university training aligns with hiring requirements.
Japan: The ageing workforce and innovation
Japan faces a unique challenge in its labour market due to an ageing workforce, which poses significant economic growth and innovation implications. This section explores how Japan is navigating these challenges.
The impact of an ageing population
With a rising proportion of individuals aged 65 and older, Japan is experiencing a shrinking workforce, declining birth rates, and an increasing dependency ratio.
This demographic shift is leading not just to reduced economic output, but also to lower employment rates and constraints on income growth. The strain on public pension schemes and government finances intensifies as the number of elderly dependents grows, putting pressure on social security systems.
International talent as a supplement
To address worker shortfalls, Japan actively aims to bring in international talent. Strategies include:
- New J-Skip and J-Find visas attract researchers, engineers, and top university graduates by easing entry for these skilled individuals to work in Japan.
- Relaxed rules around startup visas, with private companies now screening visa applicants. This aims to attract foreign entrepreneurs and boost innovation.
- Fast-tracked permanent residency in only 1 year now, down from 3 years. This big jump encourages highly skilled talent to stay long-term.
- Broader eligibility for the “specified skilled worker” visa with added job security protections. The expansion makes it easier for more foreign workers to fill pressing gaps.
The Philippines: Leveraging the growing digital economy
The Philippines is leveraging its digital economy to address talent needs and fuel growth. The country is emerging as a major global digital player with a young, tech-savvy populace and a booming tech sector.
The digital economy and talent market
The digital economy in the Philippines is experiencing rapid growth, significantly impacting the talent market and presenting both opportunities and challenges:
- A 200,000 worker IT skills gap needs addressing, with over 1 million tech roles projected by 2028. However, many Filipinos lack basic digital literacy, such as word processing and internet usage. The government is taking action to address these skill gaps by establishing the Inter-Agency Council for Development and Competitiveness of the Philippine Digital Workforce.
- By 2025, e-commerce is expected to reach a Gross Merchandise Value of $24 billion, growing at a 21% Compound Annual Growth Rate.
- Employers increasingly prioritise basic to advanced digital skills across sectors. These have become essential in modern workplaces. Demand for digital skills has also broadly increased regionally, with Asia-Pacific employers reporting major hiring gaps.
Strategies for workforce upskilling
- The Inter-Agency Council for Development and Competitiveness of Philippine Digital Workforce, focuses on elevating cloud computing, AI, web development, eCommerce and related specialised skills.
- Allocating PHP9.18 billion for employability programs like the Government Internship Program, Special Program for Students, Jobstart Philippines and vocational/technical training scholarships.
- Implementing the Ease of Doing Business and Efficient Government Service Delivery Act to streamline bureaucratic processes and improve the business environment.
- Encouraging public-private partnerships to enhance digital infrastructure and services.
- Working with the U.S. Agency for International Development (USAID) in establishing the UPSKILL Program to boost Philippine higher education.
Despite progress, challenges such as inaccessible or costly online programs and digital literacy gaps across income levels continue to hinder widespread digital skills development.
Strategic approaches to talent acquisition in Asia
Having examined the talent acquisition landscape across different Asian countries, we see the importance of strategic approaches in overcoming talent challenges. From Singapore’s upskilling initiatives to the Philippines’ digital economy focus, these insights pave the way for broader strategies applicable across Asia.
Key findings and strategic Insights
- The mentioned countries are grappling with talent shortages, worsened by factors such as ageing populations, skills mismatches, and rapid technological advancements.
- Efforts to address these challenges include government-led initiatives. The countries are also implementing policies to align education with industry needs, offering incentives for skill development, and easing immigration rules for skilled workers.
- The analysis underscores the importance of adopting strategies that combine upskilling, policy reform, and international talent acquisition. Collaboration between governments, educational institutions, and the private sector is key to developing a resilient and skilled workforce.
The way forward for businesses
Here are some recommendations to help businesses thrive in the face of the talent acquisition challenge in Asia:
- Integrate talent acquisition and development into strategic planning processes. This involves forecasting future skill needs and aligning them with business goals, ensuring that talent strategies are not reactive but proactive and aligned with long-term objectives.
- Invest in ongoing workforce training to meet rapidly changing talent needs. Creating persistent upskilling/reskilling systems, leveraging tech and fostering adaptability is key. Prioritising developing digital skills like IT and digital literacy can help address talent gaps arising from sector-wide digitisation. Such intentional development builds resilience amid fluctuating global talent dynamics.
- Adopt flexible work arrangements such as offering remote work options, flexible hours, and part-time positions. This helps attract talent and contributes to employee retention and satisfaction.
- Collaborate with educational institutions and government bodies to create internship and apprenticeship opportunities. This can help in making students and job seekers more employable.
- Use advanced HR technologies for more efficient recruitment, onboarding, and talent management processes. This can help better identify skill gaps, manage talent development, and enhance overall workforce planning.
Opportunities for growth and innovation
Addressing talent shortages in Asian economies isn’t just about filling job vacancies; it’s a pivotal moment for catalysing growth and sparking innovation. As businesses and governments tackle these challenges, they lay the groundwork for a more dynamic, skilled, and adaptable workforce, capable of accelerating technological advancements and economic expansion.
Reach out to CXC today to discover how your business can succeed in this area. Our years of experience can help take away the stress brought by trying to play catch up in this economy and region.
Investing in workforce development and embracing digital transformation opens new avenues for creativity and efficiency. This enhances productivity and positions companies at the forefront of innovation, exploring new markets and developing groundbreaking products and services.
Furthermore, bridging talent gaps encourages a more inclusive approach to recruitment and development, enriching the talent pool with diverse perspectives and skills. This diversity is a key ingredient for innovation, fostering an environment where novel ideas can flourish, leading to sustainable economic growth and competitiveness on a global scale.
In essence, overcoming talent shortages allows Asian economies to transform and innovate, ensuring long-term prosperity and relevance in the global market.
