August 10, 2022

As COVID-19 safe distancing measures were eased, demand for hotels and F&B experiences bounced back. However, the hospitality sector has been plagued with slow service due to a labour crunch. In “Commentary: Raise salaries to attract more locals to hospitality and F&B? It’s not so simple” (Channel NewsAsia, July 2022), Dr Kelvin Seah (NUS Economics) discusses how to best address this manpower shortage.

The labour crunch began at the peak of the pandemic. Initially, border closures limited the supply of incoming foreign manpower. With the lifting of border restrictions, many foreign workers in Singapore are returning home to visit their loved ones, and not all will return here for work. Local workers are also seemingly disincentivised to work in the hospitality industry, even with higher salaries offered.

Dr Seah points out that the manpower shortage is likely to be temporary, and will improve in the long run. Many foreign workers returning to their home countries will eventually come back to Singapore for work. Moreover, the strength of the Singapore dollar against other regional currencies can translate into attractive salaries, enticing prospective foreign workers and compensating for any outflow in foreign labour due to borders opening. However, Dr Seah notes that new COVID-19 variants may cause outbreaks in other countries, disrupting the inflows of foreign labour to Singapore.

Despite some calls for the government to loosen quotas on foreign labour, Dr Seah argues that it will not be necessary to do so, given that the manpower crunch is temporary. In fact, easing companies’ access to foreign manpower will result in lower wages, which makes hospitality jobs even more unattractive to local workers and reinforces companies’ reliance on foreign labour. Since easy access to foreign labour will reduce the incentives for companies to upgrade, improve working conditions, and raise productivity, maintaining the quotas is integral for improving balance in the labour market.

As such, Dr Seah suggests two solutions for hotels and F&B outlets to address the labour crunch in the long run.

Firstly, companies can rely less on manpower and more on technology, to work smarter and raise productivity. More processes can be automated and more functions can be performed by robots. Some jobs still need to be carried out by humans, but automation will help in redeploying existing manpower and boosting these workers’ productivity. Moreover, software utilising data analytics can help hotels predict expected demand for accommodation, allowing them to take on only as many guests as they can manage with the predicted level of manpower for that period.

Secondly, companies can attract local workers by offering better work conditions, which matters more to them than token pay increases. Currently, in the hospitality industry, the working hours and demands of the job can be tough, both physically and mentally. Furthermore, despite salary raises, the median monthly salary of hotel managers still remains well below that of their counterparts in the retail and recreation sectors. Hence, it is important for firms to bolster salaries, explore how to help workers upskill in tandem with career progression, and consider shorter and more flexible work hours.

Overall, Dr Seah recommends putting staff first by improving their salaries in a meaningful way, raising their productivity through technology, and improving their work conditions, in order to address the short-term labour crunch.

Read the full article here.

Photo: ‘Hotel service bell, Concept hotel, travel, room, Modern luxury hotel reception counter desk on background’, iStock/davit85