Echoes of past labour crunches are in the air

PHOTO: Echoes of past labour crunches are in the air
Above photo is Mr Edlan Chua.

SINGAPORE - Singapore has been there before, but never so deeply and not on this scale.

Da Nan Tang Tea House and Restaurant in Mosque Street stopped being a 24-hour establishment to open only 11 hours a day because it could not find enough wait staff amid Singapore's labour crunch.

"We used to have 12 waitresses," owner Teo BK said.

"Now we have only five. Those who could not get their work permits renewed dared not work for us."

Sounds familiar?

It could easily have been any of today's food and beverage (F&B) purveyors griping about the manpower drought, but Da Nang Tang Tea House cut down on its operations in 1991.

One thread remains common. "Singapore's labour shortage has always been tied to policy . . . and economic restructuring," said CIMB economist Song Seng Wun.

Right now, the government is tightening foreign worker policy and pushing businesses to improve productivity.

Just as Da Nan Tang Tea House all those years back, today Chef Lino Sauro of Gattopardo Italian Grill and Pizzabar tells BT that he has had to close his restaurant on Wednesdays, cut seating capacity to about 90 from 140 and accept 25 to 30 per cent less revenues.

All that as a result of being able to employ only 25 staff from the usual 36.

"Unfortunately, if I want to keep my salaries and standards I cannot do 140 with the people I have," he said.

Complaints that Singaporeans are simply not interested in working in these industries are also an echo of the past.

"Most people would prefer to be served than to serve," said Edlan Chua, chief operating officer of restaurant chain Paradise Group. Paradise is running at a shortfall of about 10 to 15 per cent of its required staffing levels, he added.

The result is that retailers and F&B businesses see themselves under pressure on many fronts.

"The rentals are still going up, labour shortage means increased costs, productivity is an issue purely because no matter what it is you still have to give quality time to give quality service to your customers. It's not something you can delegate out," said Singapore Retailers Association president and The Hour Glass vice-chairman Jannie Chan.

The message from the government has also been similarly firm across the years.

In 1989, then-labour minister Lee Yock Suan warned against relying too much on foreign workers, saying that doing so would be "untenable, with enormous social and economic costs".

The same song is playing again.

But observers say there are also important ways in which the current labour crunch is different from previous ones.

Previous labour shortages were more limited in their impact to manufacturing and traditional services such as transport and finance, Mr Song said.

"Now there's a much wider range of services, more bodies lying around," he said.

Electronics retailer Challenger Technologies chief financial officer Tan Wee Ko agreed that the scope of the current shortage is wider.

"Now with the explosion of the hospitality sector and hotels opening, today when we talk about the shortage it's across all sectors, and everybody's feeling it," said Mr Tan.

He added that Challenger has raised average monthly gross pay for store staff to about $1,600 from $1,200, and cut work days from six to five per week in order to attract Singaporean workers.

The wave of retail space supply that has come into the market over the past few years also suggests a much wider impact of current policy, Ms Chan said.

"Why are we having so many shopping centres?" she asked.

According to real estate services firm CBRE, private retail space in Singapore grew from 22.4 million square feet in 2008 to about 25.2 million sq ft in the third quarter of 2012, a 12.5 per cent increase.

Businesses have been exploring different ways to manage their costs and requirements.

Paradise Group, for example, has incorporated profit sharing as a way to incentivise staff, as well as developing a central kitchen to manage costs.

TungLok Restaurants (2000) has also embarked on an automation drive, and is reviewing menus and processes to improve operational efficiency, a spokesman said.

Ms Chan felt that the government should provide some short-term relief, if only because some of the current pain was a function of the government's inadequate planning when it relaxed foreign worker policy in the 2005-2006 period and the large supply of retail space over the past few years.

"Sure, in the long run it's good, but do we look at long term now?. . . If one has to give one part a push, where's the pull?" she asked.

In 1990, the government eventually relented and relaxed the foreign worker policy.

But Mr Song said that the loosening occurred as the economy grew at a brisk pace of close to 10 per cent, making the inflationary costs of tight labour policy tremendously high at that time.

A similar scenario may have to happen this time for the government to rethink current policy, he said.

"If the uptrend in growth is very strong in the next couple of years, maybe 8 to 10 per cent growth, suddenly demand for labour will be very strong," Mr Song said.

"If you don't relax on the workers' side, there's going to be very high wage inflation."