New wage rules add to cost pressure, say firms

New wage rules add to cost pressure, say firms

SINGAPORE - Bosses say their firms will feel the squeeze from new wage rules for Singaporeans in full-time work.

The regulations announced in Thursday's Budget debate state that a Singaporean must be paid at least $1,000 a month if he or she is to qualify as a full-time worker, up from $850.

The move is tied to the Dependency Ratio Ceiling, the quota system that sets the maximum number of foreign workers a company can hire for every full-time local worker.

Hiring more foreigners would mean a firm also has to increase the number of Singaporeans on its payroll, a move that will now incur extra costs if those employees were earning under $1,000.

Ms Faith Wong, human capital development director at cleaning firm ISS Facility Services, said the new rule will "definitely have a big impact" on firms, which are already facing tighter foreign worker quotas and higher levies.

"We continue to face the pressure of the upward salary climb for locals - it's a very painful tightening for us as a cleaning company," she said, adding that Singaporean wages have already been rising as a result of the manpower crunch.

The firm pays salaries ranging from $850 to over $1,000 and more than half of its employees are Singaporean.

Mr Nick Tan, owner of car grooming shop Nick and Vin Autoshine, said spiralling business costs are a concern.

"It's difficult to pass on costs to customers - my customers are regulars and used to the prices," he said.

Of his eight employees, two are Singaporeans earning below $1,000 who work shorter and more flexible hours. "For workers who need higher pay, it will help. But it will increase costs for companies, and it's up to us to increase productivity and revenue," Mr Tan added.

KH Security Agency's senior business development manager Gary Haris expects wage costs to rise by 30 to 40 per cent this year as a result of the new move, up from the usual 10 per cent yearly increase. "We agree that Singaporean workers have to be paid more, but we cannot convince buyers to pay higher prices overnight," he said.

Among its 200 employees, about 10 have base salaries of between $800 and $900 as they work shorter hours.

"The 40 per cent government wage increase subsidy from the Wage Credit Scheme will help us a bit over the next three years, but after that we are worried," he added.

Mr Chan Chong Beng, president of the Association of Small and Medium Enterprises, which represents 6,500 SMEs, said sectors that tend to be less popular with Singaporeans such as construction and retail will be hardest hit. "The pressure is now coming from a few areas - companies are being forced to increase wages, and also facing rising rental and vehicle costs," he said.

Labour MP Zainal Sapari said companies need to think out of the box in order to restructure and improve productivity.

"Restructuring will be painful to some companies, but the Government has rolled out a number of schemes, such as the Wage Credit Scheme, and various sources of funding to cushion the impact," he said.

Your daily good stuff - AsiaOne stories delivered straight to your inbox
By signing up, you agree to our Privacy policy and Terms and Conditions.