Singapore businesses struggle to reskill workforce amid AI transformation

SINGAPORE: Singapore businesses are facing a pressing challenge—not a lack of talent, but the ability to reskill employees quickly enough to keep pace with evolving industry demands. According to a new report by Workday, more than half (52%) of business leaders identify the time required to upskill employees as the primary obstacle in adopting a skills-based hiring approach.

The rise of artificial intelligence (AI) is accelerating shifts across industries, creating an urgent need for new skill sets. However, many organizations in Singapore lack a clear understanding of their workforce’s existing capabilities. The report highlights that only 46% of business leaders have a comprehensive view of their employees’ skills, making it difficult to identify training needs effectively.

To bridge this gap, businesses are moving away from traditional hiring models that prioritize degrees and job titles. Instead, a growing number are embracing a skills-first approach. Currently, 36% of Singapore companies have already adopted this model, with another 24% planning to transition within the next year.

As digital transformation reshapes the job market, companies are prioritizing technical expertise. The report finds that 64% of businesses in Singapore see digital skills as crucial for the future. However, while technical abilities are in demand, the lack of soft skills is emerging as a critical concern. More than one-third (34%) of businesses identify social skills, such as communication and teamwork, as the most significant gaps in their workforce.

While AI is a driving force behind workforce changes, businesses also recognize its potential as a tool for easing the transition to skills-based hiring. More than half (52%) of Singapore business leaders report that AI helps automate repetitive tasks, allowing employees to focus on more strategic and high-value work.

Despite these advantages, business leaders acknowledge that technology alone cannot resolve workforce challenges. Key barriers remain, including resistance to change (49%) and the need for clearer communication about the benefits of upskilling (58%).

The report reveals that 64% of leaders believe skills-based hiring enhances business performance, reinforcing the importance of reskilling initiatives in an AI-driven economy. As companies navigate this evolving landscape, the ability to quickly and effectively upskill employees will be crucial in ensuring long-term success.