Most firms that hire foreigners supportive of paying locals at least S$1,400, manufacturers fear losing competitiveness

• Firms that hire foreign workers must pay Singapore employees a “local qualifying salary”, Prime Minister Lee Hsien Loong said
• Businesses are generally supportive of this salary, which is set at S$1,400 a month
• Some plan to upskill their workers, while others hope that the Government will provide wage subsidies
• Manufacturing firms are concerned that the wage floor will affect their global competitiveness

SINGAPORE — Most companies that hire foreign workers are not worried about paying Singapore employees a minimum wage of S$1,400, but some firms are hoping for wage subsidies in the meantime, because the pay increments to their resident workforce will affect their bottom line.

For firms that export their goods, such as those in manufacturing, they said that paying Singapore workers higher salaries in the future may affect their competitiveness in the global market.

TODAY spoke to these firms days after Prime Minister Lee Hsien Loong, in his National Day Rally speech on Sunday (Aug 29), laid out plans to ​​lift the livelihoods of lower-wage workers over the long term.

Among them is a requirement for companies that hire foreign workers to pay all resident employees a “local qualifying salary”, which is set at S$1,400 a month.

The Ministry of Manpower (MOM) further elaborated on Monday that part-time Singapore workers in firms that hire foreigners will have to be paid at least S$9 an hour. The new requirement will kick in from September next year.

IMPROVING WORKERS' SKILLS AND PRODUCTIVITY 

LS 2 Services, an environmental services and cleaning company, said that the firm will align itself to MOM’s policy and that it will “look to provide the necessary incentives to retain the talent in the workforce”.

The company has about 2,000 employees, a quarter of them foreigners from Malaysia, China and Vietnam, among other nations.

Its corporate services director Tan Wei Ying said that for the rest of the resident workers, a “minority” of cleaners earn below S$1,400, taking home about S$1,200 a month.

On how the increase in some of the workers’ salaries will affect the firm’s operational costs, she said that they will work with clients to ensure a “win-win” situation.

“There may be an avenue for the company to make our operations more efficient, so that may not lead to a significant cost transfer to the client.”

For ground handling firm Dnata, its managing director Musdalifa Abdullah is hoping that the Government would provide subsidies to support the wage increases, as this would “enable us to further invest in the training and upskilling of our people and enhance the productivity of our workforce”.

He did not elaborate on the number of people in the firm who stand to benefit from the policy, but said that the salary hike will have an imapct on the firm’s financials, but that it is an “investment in our people”.

“We expect these to result in improved productivity and efficiency, and ultimately, cost savings.”

Security firm Certis said that it supports the expanded requirements of the local qualifying salary, and that it reviews its salaries regularly.

“In addition, we provide wage supplements to support our employees and their families during this challenging time.” 

Though Certis did not provide a breakdown of the number of employees who will benefit from the new regulation, recruitment site jobstreet.com.sg shows that the salary for the role of customer service officer in the healthcare industry starts at S$1,200.

FEAR OF BEING LESS COMPETITIVE

Firms in the manufacturing sector that spoke to TODAY were generally unaffected by the new regulations, but said that they are worried for the future should the local qualifying salary continue to increase, because it will affect their ability to be globally competitive.

Mr Ryan Ng, general manager of manufacturing firm Chong Fong Engineering, said that it hires both Singapore and foreign workers, and the impact on the firm will be minimal. The resident workers they hire are paid about S$2,000 to S$3,000.

His bigger concern is when there are adjustments made in the future and the local qualifying salary rises above S$2,000.

PM Lee had said in his speech that the qualifying salary will be adjusted “from time to time”.

“We are concerned because in the longer run, the manufacturing industry is always looking at export competitiveness,” Mr Ng said.

Should costs of their exports go up due to rising labour costs, it would mean that the firm, which manufactures aerospace-related products, will be less competitive compared with foreign manufacturers.

Agreeing, Mr Tan Ru-Ding, director of Delphic Manufacturing Solution, said that his firm, which manufactures engineering materials and tools, is also competing with companies from China, Malaysia, Taiwan and Thailand.

“People who are giving us business can easily go to other countries,” he said. “As a business, if we make a wrong move, hundreds of people can be out of a job.”

‘HARD-PRESSED’ TO KEEP FOOD PRICES LOW

Responding to queries from TODAY, the Restaurant Association of Singapore said that with food-and-beverage (F&B) operators subject to the local qualifying salary (for those that hire foreign workers) and the Progressive Wage Model, meal prices may increase.

The Progressive Wage Model sets out minimum pay requirements for workers at different skill levels and mandates wage increases in tandem with the workers’ training and skills.

The wage model will apply for retail, food service and waste management sectors as soon as September next year.

“The F&B sector is not without its share of challenges, such as unsustainably high and rising rentals, acute labour shortage and increased cost of raw materials,” the association said. 

“And with the upcoming GST (Goods and Services Tax) increase in the near future, F&B operators will be hard-pressed to keep prices of some of our comfort food at current levels.”