Disengaged workers cost the Singapore economy some US$73.6 billion in lost productivity: report

[SINGAPORE] Only 14 per cent of employees in Singapore were engaged at work in 2025, with a staggering 86 per cent disengaged and costing the economy an estimated US$73.6 billion in lost productivity, a report has found.

The inaugural Singapore Workplace Report 2026, released by the Singapore Institute of Directors (SID) and management consultancy Gallup on Monday (Jun 22), highlighted that in comparison, the level of employee engagement for South-east Asia was higher at an average of 25 per cent while the global mean was 20 per cent.

A press statement also noted that “low engagement is transitioning from a cultural concern to a strategic liability” with Singapore’s gross domestic product growth forecast to slow to 2 to 4 per cent in 2026, from 5 per cent last year.

The report – which drew on Gallup’s global workplace research, interviews with senior leaders and discussions at an SID-facilitated leadership roundtable – also found that the challenge of low engagement appears particularly acute among younger workers in Singapore.

Employees under 35 reported an engagement rate of just 10 per cent, compared with 16 per cent among their older colleagues. 

The report warned that the gap could widen unless organisations adapt how they structure work, provide development opportunities and support career progression for younger employees.

Managers only “modestly effective”

The report also included a leadership survey of 14 senior leaders, who rated their organisations’ managers as only “modestly effective” at developing and engaging employees. This was despite widespread recognition of the importance of workforce engagement.

These leaders from the private and public sector gave their organisations’ people managers an average score of 3.32 out of five for their effectiveness in developing and engaging employees.

The findings come even as nearly three-quarters of leaders interviewed for the report strongly agreed that having engaged employees was a strategic priority for their organisation, while the remainder also agreed.

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The report noted that most leaders interviewed also recognised the importance of managers in creating an engaged workforce.

However, many organisations continue to promote high-performing individual contributors into management roles without adequately preparing or supporting them, it said.

Nevertheless, Gallup’s research suggests managers have a substantial influence on workforce engagement, accounting for around 70 per cent of the differences in engagement levels between teams.

For the boardroom, this reinforces the importance of leadership development, succession planning and culture as strategic priorities, said SID’s CEO Emily Poon during an event to launch the report, which was attended by Minister of State for Manpower Dinesh Vasu Dash.

“Boards have long recognised financial capital as a driver of value creation. Increasingly, human capital deserves the same level of strategic attention as AI reshapes work and business models,” said Poon. “The organisations that succeed will be those that develop their people as deliberately as they deploy technology.”

However, many organisations are “flattening”, said Gallup CEO Jon Clifton, adding that this is partly to avoid the damage caused by bad managers, but also because some CEOs believe that as AI and automation spread, they can worry less about people’s emotions.

“This is the great irony, because at the moment that we’re flattening management is the time that we need it the most,” said Clifton, adding that this is particularly important at a time when stress and disruption at work are rising.

He noted when an organisation has great managers who know how to handle the emotional side of work – through clear direction, two-way dialogue and helping people use their strengths – workplaces thrive.

What makes a good manager

The report argued that improving engagement could yield significant economic and business benefits, noting that “even a marginal increase in employee engagement” could boost Singapore’s economic growth and the performance of its companies considerably.

However, one challenge, according to broader Gallup research cited by the report, is that organisations fail to select people with the right talent for management roles 82 per cent of the time.

Another is the common practice of rewarding managers based on individual performance rather than how well they lead their teams.

“Since what gets measured gets managed, the result is predictable: Managers prioritise their own individual performance goals to the detriment of their people’s engagement,” the report said.

On what makes a good manager, the report said effective managers were not necessarily charismatic leaders with a compelling vision. 

Instead, they excelled in three areas: identifying and developing employees’ strengths, fostering engagement through regular recognition and feedback, and driving performance through clear expectations and accountability.

Leading effectively

While many leading companies have invested heavily in leadership development for senior executives and technical training for individual contributors, the report noted people managers have received “far less investment and support”.

To address this gap, it identified building manager capability as one of four priorities for action in developing an organisation’s engagement strategy. 

The report said that organisations should equip managers with the time, tools and authority needed to lead their teams effectively. 

This includes giving managers greater autonomy and more time to coach employees, providing guidance on conducting meaningful coaching conversations, and putting in place systems that support accountability for team engagement. 

“When managers receive the right support, engagement becomes tangible and real. When they do not, even the best-designed engagement strategies struggle to gain traction,” the report pointed out.

The other three priorities identified in the report were aligning organisational culture with employees’ day-to-day experiences, repositioning human resources as a strategic function, and maximising “talent density” by developing and fully utilising employees’ strengths. 

MOM’s Dinesh said that there is an opportunity for employers to be intentional about workplace and workforce development.

“I want to suggest that this may even be a strategic viability, reframing human capital as a strategic issue requires leadership at the highest level,” he said. “When human capital is treated with the same rigour and discipline as financial capital, organisations make better decisions about their people, and these better decisions then translate directly into better long-term performance.”

To help directors better oversee workforce issues, the press statement said that SID is working with Singapore Management University (SMU) to launch a new module on strategic human capital stewardship in the fourth quarter of 2026 as part of the SID-SMU Directorship Programme.

The module, added the statement, will provide directors with practical frameworks and governance tools to oversee people, leadership and culture as drivers of long-term organisational value.