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High wage-cost pressures in Singapore

Reuters

The article by Reuters was shared a lot on the facebook last week. It says that higher wages in Singapore are raising business cost and pressuring profit margins when Singapore is in the warnings of recession.

The actual example is SaladStop owner Adrien Desbaillets' decision of giving up the expansion plan for his organic food chain in Singapore.

Instead of expanding business here, he is now branching out in Manila, Jakarta and even in Tokyo. Desbaillets tells that he pays his Singapore staff S$1,600 to S$3,200, versus S$300-S$400 in Manila.

"We would have opened two or three more outlets in Singapore if it weren't for the high wages ... and we would have taken on more projects," said Desbaillets. "We've been able to hedge our risk a little with our expansion abroad."

The analyst points out that recent data showed the unit labour cost index hitting a record high of 116.7 in the 2nd quarter.

The figures also tells something: Almost 42,000 businesses ceased in the 1st half of this year versus nearly 49,000 in the whole of 2015. (Government data)

Many companies now need to look for merger opportunities to save on the labour cost.