Foreign worker quota cuts hit sectors beyond F&B, retail

Singapore

THE list of businesses that will be hit hard by the upcoming foreign worker quota cuts for the services sector is a long one - covering hotels and entertainment to logistics firms.

In response to queries from The Business Times, the Ministry of Manpower (MOM) said the greatest impact would be felt in accommodation; arts, entertainment and recreation; food services; real estate services; and transportation and storage.

Retail was not on the list, though in his Budget speech on Monday, Finance Minister Heng Swee Keat had named retail and food and beverage as "very labour-intensive" segments when announcing the changes.

The services sector's foreign worker dependency ratio ceiling (DRC), which limits the proportion of foreign workers in a firm, will go down from 40 per cent now to 38 per cent on Jan 1, 2020, then to 35 per cent a year later. Within this cap, the services sub-DRC for S Pass holders will similarly fall from 15 per cent to 13 per cent and then 10 per cent.

The aim is to get firms to boost productivity and reduce their labour reliance. Yet industries such as logistics have long faced a labour crunch.

"Hauliers have a higher reliance on foreign drivers due to the unwillingness of younger locals to take up this job," said Alvin Ea, co-founder and chief executive officer of logistics start-up Haulio. "With this quota cut, it will make it harder for the haulage industry unless there are significant efforts to improve on-the-job productivity of the hauliers such that they can do more with less."

Automation is one reason retail logistics startup blu is unfazed, with chief executive Prashant Dadlani noting that its promotion of self-collection lockers can "support other businesses in their transformation as well".

Yet even with productivity efforts, the human touch remains key for certain services. Royal Plaza on Scotts general manager Patrick Fiat said: "It is a fine balance as hotels are in a high touch industry and with the implementations, the guests' experience should not be compromised."

His hotel has been raising productivity through moves such as an automatic uniform conveyor belt system, and the use of pre-cleaned, pre-cut vegetables in its kitchen.

Within an industry, firms' needs also vary. Andrew Kwan, managing director of Commonwealth Capital Group - whose portfolio includes F&B brands PastaMania, Soup Spoon, and Swissbake - said: "As an industry, we all have to find our own pathways to transform our respective dining concepts from one which is high touch to one that is high tech."

Yet Loh Lik Peng, founder of the Unlisted Collection group of restaurants and hotels, noted: "All over the world high service levels imply the need for more manpower and Singapore is no different. If you are fast casual you can have less staff but if you are higher end you need more staff. It's not easy to change this equation."

Though facing a known manpower crunch, the healthcare sector was not on MOM's list. In a joint reply, MOM and the Health Ministry (MOH) said: "We will continue to help healthcare providers ensure that day-to-day operations are not affected.

"MOH is in touch with healthcare providers to explore various ways to support them. MOH will also continue to spur the sector in productivity improvements and ensure good local employment outcomes in the sector."