Key Asian markets and their transport and logistics sectors are recovering from disruptions to labour availability caused by the COVID-19 pandemic, but in an uneven manner and pace across most South Asian regions.
QBE Asia, a leading general insurance and reinsurance company in collaboration with Oxford Economics released its industry report entitled: “Building Workforce Resilience in the Transportation and Logistics Sector” today ( Sept 14), which revealed companies investing or operating in Hong Kong, Macau, Malaysia, Singapore, and Vietnam, having a clear and objective appraisal of the specific local labour challenges and a consideration of how best to navigate them.
Malaysia and Singapore share commonalities in that there is a clear gap in labour availability for skilled and unskilled positions in the transport and logistics sectors, posing challenges for businesses. Commonalities were seen as a clear gap in labour availability for skilled and unskilled positions in the transport and logistics sectors, posing challenges for businesses.
Labour costs are also higher in these jurisdictions compared with Vietnam, for instance. Vietnam presents a slightly different proposition where manual labour availability is unlikely to be an issue, but companies have found it difficult to fill technical and management roles.
The report which delves into the current labour market situations and challenges in the two sectors faced by companies investing or operating in Singapore, Malaysia, Vietnam, Hong Kong and Macau, cited the transport and logistics sector accounted for a sizeable proportion of total employment in Singapore, approximately 6.8%, ranking first among these five economies. The numbers are 3.9% and 3.7% for Vietnam and Malaysia respectively.
The onset of the Covid-19 pandemic and associated health restrictions had an adverse impact on employment in transport and logistics in Vietnam, Singapore, Macau, and Hong Kong. Only Malaysia among the examined countries saw no declines in transport and logistics employment during the pandemic.
The transport and logistics sectors in Singapore and Malaysia both experienced robust recoveries in employment after the pandemic, with levels recovering beyond pre-pandemic peaks by early 2023.
Recovery from the pandemic has coincided with increased difficulties for employers in finding suitable personnel. Vacancies surged with the onset of the pandemic and have, as a general rule, failed to fall back to pre-pandemic levels.
Both in the short run and long run, employment prospects in the transport and logistics sector in Southeast Asia appear robust, the report found. Critically, the report offers insights on how transport and logistics players can overcome today’s talent and workforce shortages, and adequately plan for future manpower and leadership.
Importance of transport and logistics in total employment
The report cited that the transport and logistics sector directly employ just under 3 million people in the five economies of interest. This is an under-estimation because it uses the latest available data, which are for Q1 2023 for Hong Kong, Macau, Malaysia, and Singapore but for Q1 2021 for Vietnam, and we are confident that employment in Vietnam has grown substantially since.
Among these countries, the sector accounted for a sizeable proportion of total employment: between 3.2% (Macau) and 6.8% for Singapore. These shares have been mostly static, with relatively little movement in a region where both the transport and logistics sector and the broader economy as a whole have been growing strongly.
Major determinant factors
For Malaysia, companies in the transportation and logistics sectors will continue to face acute labour shortages affecting operations. The report cited that this applies to both skilled and unskilled labour. For example, for water transport, Malaysia faces a dearth of captains and crew to pilot barges, with many of these positions filled by foreigners.
The trucking industry also continues to face difficulties in attracting manpower despite drivers being relatively well paid, given gruelling schedules and the danger associated with poor road conditions in rural areas.
Meanwhile, in Singapore, labour shortages will continue to be a key issue impacting the transport and logistics sectors. A shortage of workers such as bus drivers will continue to drive up operating costs, with the problem exacerbated by increasing demand for such workers amid the reopening of borders and recovery of the tourism sector. For the logistics sector, there also continues to be a shortage of skilled labour such as those with skills in supply chain management, amid rising demand for logistics services.
In Hong Kong, an ageing population and the outflow of local young people are exacerbating labour shortages in the transportation and logistics sector, particularly in public transport and civil aviation. The labour shortage comes at a time when Hong Kong is expected to see surging demands of international personnel and cargo travelling through 2023-24. In response to the challenges, the government plans to introduce over 8,000 skilled foreign workers later this year for positions such as bus drivers and airport staff. However, pushback from local labour organisations could limit the government’s ability to significantly increase the number of foreign workers in the short term.
The reopening of Macau to international travel and the surging inflow of tourists from mainland China will pose challenges to the city’s transportation and logistics sector. Labour shortages are likely more pronounced in tourism related positions such as tour bus drivers. As Macau seeks to diversify its economy from the gaming industry and strengthen its role as a regional logistics hub, demand for skilled labour will increase in sectors such as port operations and cross-border transportation. Macau has more established and loose regulations on hiring foreign labour (including from mainland China), which can help alleviate labour shortage pressures in the coming years.
Vietnam’s abundant and affordable labour pool is undergoing rapid changes that affect the transport and logistics sectors. The outflow of internal migrants from traditional economic centres in the south will increase manual labour availability in northern, central coastal and Mekong Delta provinces. Nevertheless, workers in these sectors possess insufficient technical and management skills, according to 60-80% of firms surveyed. The legalisation of independent labour organisations can increase collective bargaining, though the absence of guidelines facilitating collective bargaining has so far impeded the establishment of these entities.
