There is a very good chance that prices of retail goods and food at malls and restaurants in Singapore will go up significantly this year (I project at least 10%), due to higher foreign workers levy and tigher quota. More will head to JB during weekends or holidays to reduce costs.
Retailers, F&B bosses fearing the worst in foreign-worker curbs
Published February 27, 2013
By malminderjit singh
REACTIONS TO BUDGET
Mr Tjioe: Manpower crunch will lead to loss of chefs - PHOTO: TUNG LOK RESTAURANTS
[SINGAPORE] Moves to further curb the inflow of foreign manpower in Monday's Budget aren't sitting well with some retailers and food & beverage (F&B) operators who believe they will be hit hard.
With a dearth of Singaporeans willing to take up jobs in these sectors, retail and F&B firms say that a lack of manpower, resulting from the reduction in foreign worker dependency numbers and the increase in the foreign worker levy as announced in the Budget, would lead to a loss of business and decline in service standards and could force them to either wind down or move out of Singapore.
The Singapore Business Federation (SBF) acknowledged that this was a real problem for the service sector in general.
"It is clear the government is pursuing a targeted approach to the foreign manpower issue, and the announced measures favour companies that are committed to productivity-led growth with the emphasis on hiring locals. The service sector, long deemed a productivity laggard, has been delivered a resounding message to restructure with further reductions in work permits, increased foreign worker levies and tighter dependency caps," said Ho Meng Kit, CEO of SBF.
Mr Ho added that many of these services companies in the F&B, hotel and retail will have a hard time adjusting and some will fail.
Companies BT spoke to were pessimistic about their future, insisting that foreign manpower was integral to their operations.
The F&B industry, for instance, feels it needs foreign manpower because there simply aren't enough workers among locals for the sector.
"Singaporeans don't even turn up for interviews when we advertise for vacancies," said Karambeer Khanijou, director of Old Empire and TSA Wines, adding that even when Singaporeans are hired, they typically do not last more than a week or two, a phenomenon he has witnessed in other F&B establishments too.
Making it harder to hire foreigners will result in F&B outlets becoming understaffed, which would not only lead to falling business for these operations, but also result in a decline of service standards, F&B operators said.
Mr Khanijou told BT that he knew of two F&B outlets in Singapore that have closed down for these reasons and said he would not be surprised to see more suffer the same fate this year.
Others in the industry feel the tightening could lead to a loss of creativity and damage the industry's reputation.
Andrew Tjioe, president of the 300-member strong Restaurant Association of Singapore and executive chairman of the Tung Lok Group, reckons the manpower crunch will lead to a loss of chefs who are a source of creativity in the industry.
"Singapore used to be one of the cuisine capitals in the world and in Asia, but I think this glory is fading because now we don't have the service and soon we won't have the creativity. Those who do have creativity won't want to stay in Singapore, (as) they would rather go overseas and there are many countries that will be willing to take them," said Mr Tjioe.
Companies may also opt to relocate away from Singapore to save their operations.
Foodedge Gourmet, for one, is thinking of relocating segments of its food business to Malaysia because it feels the labour crunch will make it more difficult for it to operate here. A spokesman for the company told BT that automation to achieve productivity gains has its limitations, since widespread automation requires more land, which is a substantially higher business cost here and would require a large volume of production for economies of scale to be achieved.
The picture isn't rosy for the retail sector too, said R Dhinakaran, managing director of the Jay Gee Melwani Group and vice-president of the Singapore Retail Association.
Mr Dhinakaran said curtailing foreign labour may hurt retail companies more as the room to make productivity gains is more limited than other sectors because of the limitations of automation completely being able to replace the "human touch" of retail jobs.
Retailers not only stand to lose money if they are understaffed, but the drop in service standards compared with neighbouring countries could also hurt tourist spending, he warned.
Some retail businesses have become accustomed to the shortage of staff. Terence Yow, CEO of shoe retailer and distributor Enviably Me, said he has assembled a high-quality workforce that can multi-task to get around this problem, but he concedes that such an approach would not be able to overcome a severe reduction in headcount.
http://www.businesstimes.com.sg/pre...s-fearing-worst-foreign-worker-curbs-20130227
