The energy crisis triggered by the Iran war is wreaking havoc on Singapore's business landscape, with a recent poll revealing that most firms are grappling with soaring energy costs and a host of other challenges. This crisis is not just about rising prices; it's a complex issue with far-reaching implications for the country's economy and its businesses.
The survey, conducted by the Singapore National Employers Federation (SNEF), paints a grim picture. A staggering 96% of employers reported increased operating costs, with energy prices being the primary culprit. This surge in energy costs is causing a ripple effect, pushing up the prices of utilities, fuel, materials, and freight. The impact is particularly severe, with almost one-fifth of businesses facing cost increases exceeding 25%.
Manpower costs are also a significant concern, with over half of the respondents flagging them as a key issue. This is a critical point, as it highlights the struggle for businesses to manage both rising operational and labor expenses.
The hospitality, food and beverage, and retail sectors are particularly vulnerable. These industries are facing rising temporary labor costs as the market adjusts to the more expensive operating environment. However, it's interesting to note that despite these challenges, most employers have not made significant changes to staffing or work arrangements. Instead, they are opting for more cautious strategies.
Among those who have taken action, the most common responses include deferring hiring and expansion plans, redeploying or cross-training staff, and reducing headcount through natural attrition. A quarter of businesses have also cut bonuses, allowances, and benefits, while about one-fifth have reduced work hours. These measures are a testament to the employers' determination to manage costs while preserving jobs.
The poll also reveals a cautious outlook among employers. A significant 39% have a negative outlook for the next six to 12 months, indicating a sense of uncertainty and concern. This sentiment is further emphasized by their requests for support, with most employers calling for tax relief or financing assistance if energy prices remain high. They also advocate for energy cost relief, subsidies, and a delay in manpower policy changes that could exacerbate costs.
The upcoming changes to the Employment Pass and S Pass salary thresholds are a cause for concern. From 2027, bosses looking to hire foreign employees will face higher costs, with the minimum qualifying salaries for Employment Pass holders rising from $5,600 to $6,000, and for S Pass holders, from $3,300 to $3,600. This could further strain businesses already struggling with rising operational costs.
SNEF's chief executive, Hao Shuo, highlights the need for the government to consider the economic conditions when implementing foreign manpower policy changes. He suggests introducing a tiered level of support under the enhanced Progressive Wage Credit Scheme to assist employers in raising wages for lower-wage workers. This proposal underscores the complexity of the situation and the need for a nuanced approach to policy-making.
In conclusion, the energy crisis and its aftermath are presenting significant challenges for Singapore's businesses. The poll's findings underscore the need for a comprehensive and supportive policy response to help employers navigate this difficult period. As the global economic situation remains fluid, the government's decisions will play a crucial role in shaping the future of Singapore's economy and its businesses.
