Tech sector believes recent layoffs could stem ‘frothy’ asking salaries, 'may not be a bad thing': Tan See Leng
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- Feedback from the tech industry is that recent layoffs could lead to lower asking salaries in the sector, Manpower Minister Tan See Leng said
- The industry players believe this could be good for the sector, he added
- Experts told TODAY that people in non-tech roles are more likely to be affected when it comes to asking salaries
NUR HIKMAH MD ALI
Published December 1, 2022Updated December 2, 2022
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SINGAPORE — Asking salaries in the tech sector will likely decline in the wake of a spate of retrenchments, and this will lead to a more sustainable growth of the sector, Manpower Minister Tan See Leng said, adding that this is based on feedback he has received from industry players.
Speaking at a press conference on the advanced release of the annual Labour Force in Singapore report by the Ministry of Manpower (MOM) on Thursday (Dec 1), Dr Tan was referring to the 1,270 retrenchment notices from tech companies that was submitted to MOM from July to mid-November this year.
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Dr Tan earlier revealed this number in Parliament on Nov 28, in a reply to several parliamentary questions on the mass tech layoffs, in which he also said that about eight in 10 of the affected workers were from non-tech roles.
“I’ve spoken to some (tech) industry players and insiders. They feel that the recent round of internationally announced layoffs involving many tech companies is actually going to remove some of the 'froth' in terms of the high asking salaries of people in that sector itself,” he said.
“And many of the insiders within that (tech) industry have gotten back to me (saying) that (the mass layoffs) may not necessarily be a bad thing because the tech insiders think that the growth (of the tech companies) will be more sustainable moving forward.”
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Economists who spoke to TODAY said that since most of the recent retrenchments affected people in non-tech roles, they expect that it is only the asking salaries (expected salary) for such roles that will decline, while workers with tech skills will likely continue to demand high salaries.
RISING SALARIES FOR WORKERS IN TECH INDUSTRY SINCE 2001
Statistics from MOM showed that the median gross monthly income of full-time employees, including employer’s Central Provident Fund (CPF) contributions, in the information and communication (I&C) sector has increased by 75 per cent from S$3,480 in 2001 to S$6,092 in 2021.ADVERTISEMENT
For comparison, the median gross monthly income of full-time employees, including CPF contributions, for the real estate sector increased by 36.5 per cent from S$3,000 in 2001 to S$4,095 in 2021, while the professional services sector saw about a 67 per cent increase from S$3,500 in 2001 to S$5,850 in 2021.
Most tech companies are classified under the I&C industry but not all. Meta, which is the parent company of Facebook and Instagram, for example, is not included in this category.
There is no separate classification specific for tech companies or a breakdown of how much tech employees earn in tech versus non-tech roles.
The sharp increase in wages of employees in tech companies between 2001 and 2021 is attributed to the tech talent crunch in Southeast Asia, including Singapore.
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In the Southeast Asia Tech Talent Compensation report released by venture capital firm Monk’s Hill Ventures and recruitment firm Glints in March 2021, tech roles pay the highest compared to other industries, due to the high demand but shortage of tech talents in Asia, particularly engineers and product managers.
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The competition among tech firms also contributes to the high demand and above-market rates for tech talent.
BLEAK OUTLOOK FOR NON-TECH ROLES IN TECH INDUSTRY
OCBC bank's chief economist Selena Ling said that the global tech industry is facing some "indigestion currently" after the last few boom years due to lower global growth prospects, and the complex geopolitical and policy landscape.“The salary expectations are a function of the industry growth prospects, so it is unsurprising that there is some moderation,” she added.
“That said, digitalisation is a structural mega-trend, meaning that demand will continue to be resilient over time, just that the growth may be slower compared to the recent past."
Economist Song Seng Wun from CIMB bank said it is possible that the asking salary of non-tech workers in tech companies will be lower than pre-inflation and mass tech layoffs.
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“Fundamentally, salary depends on demand and supply for a particular skill set. And because tech companies laid off (mostly) non-tech employees, it is clear that demand for non-tech employees is low,” Mr Song said.
He added that the recent tech mass layoffs may not necessarily mean that non-tech workers in the tech industry will not be laid off in the future.
“In fact, if the economy worsens, we might be seeing more layoffs.”
Associate Professor Walter Theseira, economics lecturer from the Singapore University of Social Sciences, also said that he expects fewer job opportunities for non-technical or engineering workers in the tech industry.
“When the tech sector was expanding, firms had the bandwidth and resources to engage in a lot of activities beyond their core technical competencies or products.
“Now, they are cutting what doesn’t contribute to revenues (non-tech roles). Thus, my current expectation is that the market may not have significantly affected experienced professionals with expertise in engineering, coding, and technical roles and functions," he added.
“But the number of opportunities is probably not good for people who were hoping to get into the sector with parallel skills or through conversion programmes and the likes, who do not have a background in tech.”
