Will Tech Salaries Decline in 2023 Amid Tight Labour Markets & Record Inflation?

Jan - Feb 2022

The job market has never been tighter for tech employees, at least in recent memory. 

For several months now, budget cuts and layoffs have been a running theme in the once impervious industry. Tesla and Amazon stocks plunged by 60% and 51% respectively, while former employee havens like Meta and Shopee axed 11,000 and 7,000 positions globally. 

The impact of shrinking budgets has reached Singapore. 1,270 workers in tech were made redundant between July to mid-November 2022. With Singapore’s economic growth expected to slow from 3.8% last year to less than 2% in 2023, will there be more employees in such precarious positions in the months to come?

If these numbers are giving you the jitters, fret not. Believe it or not, there is a silver lining around the dark economic cloud that’s looming ahead.

Understanding the economic climate and mass tech layoffs

For tech workers to understand where and how to protect themselves against layoffs and inflation, we must first understand how tech companies arrived at their current situation in the first place. For that, we’ll have to rewind the clock to 2021.

Times could not have been more different. The tech sector was experiencing a gold rush. Some tech employees even saw their salary double from switching jobs. Monthly salaries for lead engineers skyrocketed from an already impressive $12,000 in Q1 2021 to a staggering $16,000 in Q3. Even entry level software engineers could command salaries of up to $7,250.

Tech firms could afford dangling juicy offers to attract candidates because of the pandemic-fuelled boom that supercharged digitalisation and demand for tech services. The biggest firms with the biggest budgets hired aggressively to hoard talent, forcing other firms to follow suit. 

Within a single year, international conflicts, the reopening of borders, inflation, rising business cost, and call back of investor funding impacted tech company funding, with some freezing headcounts or cutting jobs altogether. Companies like Meta, which hired over 15,000 workers globally within the first three quarters of 2022, were forced to cut 11,000 jobs just two months later in November.

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Tech professionals still in demand in 2023 despite layoffs

But those numbers only tell one side of the story. Despite what headlines might suggest, tech workers did not suddenly become redundant overnight. In fact, 4 in 5 redundancies that happened in tech firms impacted non-tech individuals such as those in marketing, sales, and corporate functions.

Even software engineers, security analysts, and data scientists who found themselves out of a job were able to find their next gig quickly. According to a survey by ZipRecruiter, nearly 80% of workers landed new jobs within three months of searching. 40% of those rehired found new jobs within less than a month.

Salaries are also expected to rise by 3.75% this year, outpacing pre-pandemic 2019 (3.60%) and post-pandemic 2022 (3.65%). According to Mercer’s Total Remuneration Survey, further increases might be on the horizon if recession doesn’t hit as hard, as over 50% of companies are withholding further increases until the economic outlook becomes clearer.

What type of companies will remain stable during a recession?

The ability to build code, debug, and problem solve is still very much in demand, only in different places. 

2023 may not be the best time to join companies that are hoping to become the next industry unicorn. In fact, startups that raised massive investment capital from being overvalued in 2021 will likely face massive budget cuts this year, if they haven’t already.

It may sound a little mundane, but companies with strong balance sheets, stable profitability, and proven business models may be the way to go for tech professionals looking for their next job, amidst the economic storm. 

The local aviation sector has nearly completed a 180o degree recovery, and the reopening of China’s borders is expected to give Singapore’s world class airlines an additional boost. Food & Beverage and retail sectors are expected to pick up as well thanks to the inflow of tourists. 
Vacancies within essential services in finance, insurance, and real estate are expected to open up as well, alongside B2B services that keep corporations running. While the economic growth projection for 2023 remains at a modest 0.5% to 2.5% at the time of writing, long standing businesses can likely give employees stability.

Job vacancy rates in Singapore by sector:

  • Air Transport: 5.6%
  • Accommodation: 10.3%
  • Food & Beverage: 6.3%
  • Retail Trade: 6.5% 
  • B2B services: 5.5%
  • Finance and insurance services: 6.1%
  • Real estate services: 5.4%

Upskilling is still the best protection against a recession

At the end of the day, possessing a wide ranging repertoire of skills and having deep expertise in certain fields will place you in the best position to weather the economic storm. It’s tough to predict with 100% certainty which industries will take off next, but staying informed on the latest tech trends by getting advice from industry professionals can give you space and time to pivot should any of your paths shut off. 

Luckily for you, we’ve got all the tech news and expert advice that you need right here. Simply follow the TTAB page to stay updated. You can even meet industry leaders face-to-face and receive tailored advice from them by joining the TTAB Career Conversation

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