Mind the labour gap

FINANCE Minister Heng Swee Keat noted in his Budget speech that Singapore's productivity growth has been uneven across sectors, with some segments in the services sector like Food & Beverages and Retail remaining very labour-intensive. Growth in S Pass and Work Permit holders in the services sector has risen by about 3 per cent or 34,000 workers per annum in the last three years, hence the need to calibrate policies to take action early in view of the economic headwinds and cost pressures ahead.

From January next year, the overall Services Dependency Ratio Ceiling (DRC) will be reduced from 40 per cent to 38 per cent and the Services S Pass Sub-DRC will be cut from 15 per cent to 13 per cent. The following year, the respective ratios will be further trimmed to 35 per cent and 10 per cent.

The latest move has been met with angst from services companies concerned about foreign manpower tightening coming at a time when they are still struggling with restructuring, survival and rising costs.