Labour costs could soar by up to 20% in some sectors

Firms will feel pain of higher foreign worker levies and tight labour market


While firms may feel the pressure, workers can expect wage increases this year. With low unemployment, potential nominal wage growth of around 4 to 5 per cent and inflation expected to stabilise at around 2 to 3 per cent this year, real wage growth is on the cards for the man in the street, said OCBC economist Selena Ling. -- ST PHOTO: KEVIN LIM

The double whammy of higher foreign worker levies and a manpower crunch could send labour costs in some sectors soaring by as much as 20 per cent this year.

The hit will come on July 1 when companies in the services, manufacturing and construction sectors face levy hikes of between $15 and $200 for each foreign worker on staff.

"The tighter labour marketand the full force of levy measures are going to make it a pressuring environment for companies," said Mr Kurt Wee, president of the Association of Small and Medium Enterprises.

The pain will be felt particularly in the building game. Monthly levies will increase to a record $950 for each lower-skilled foreign worker hired by construction firms.

straitstimes.com