Singapore — New restrictions on foreign workers imposed by the Singaporean government has raised concerns about a rise in labor costs for small and medium-sized businesses.
Government spending and policy is a hot topic among businesses in Singapore, Malaysia, and Pakistan, according to the Association of Charted Accountants(ACCA) and the Institute of Management Accountants (IMA) in a quarterly report on global economic conditions published Thursday.
“In Singapore, the comments about government policy were mainly related to the restriction on numbers of foreign workers, causing concerns that labor costs would rise, but also included positive perceptions on such things as government incentives for SMEs [small and medium enterprises],” the report said.
Singapore’s new rules go into effect in August 2014. The government announced last month that businesses with over 25 employees must advertise vacancies for jobs paying under S$12,000 (US$9,685) on a new jobs bank administered by the state for at least 14 days before being able to bring in a foreign national.
An increase in foreign workers in recent years has pressured the public transport system and pushed up housing costs, and the government’s immigration policies have become a contentious issue, says a CNBC report.
Non-residents now make up more than a quarter of Singapore’s population of 5.4 million, which is up from 4.03 million in 2000.
“The traditional source of labor from outside the country is being tightened and that means a changed landscape for small and medium-sized firms,” said CIMB Regional Economist Seng Wun Song. “The message is put better technology to use, pay low-paid workers better. All this adds up in terms of higher costs.”
“There will be an inflation impact from the changes in the labor laws, which is why the government is looking at staggered wage increases sector-by-sector,” said Song.
But according to the quarterly report, Singaporeans remain upbeat in their overall business sentiment.
“Overall, businesses in Singapore were the most positive among the major ACCA and IMA markets towards their government response to the economic downturn, with 46 percent of SMEs rating this as good, far above the global average of 15 percent,” said Leong Soo Yee, Head of ACCA Singapore, in a statement.