In a twice yearly review, the Monetary Authority of Singapore (MAS) said on Tue (30 Apr) that Singapore’s job market will remain “tight” this year amid the continued tightening in foreign manpower.
As such, Singapore’s wages will grow at a faster pace in 2013, contributing to higher labor costs and price pressures to businesses even as the economy expands at a “modest” pace.
The Govt has been tightening curbs on foreign workers in response to the low productivity as well as Singaporeans’ increased anger towards Govt’s liberal FT policies over the years. The minimum wage requirement for foreign S-pass holders has been increased from $1,800 to $2,000. Since Sep last year, the Govt has also changed the dependant privileges for foreigners working in Singapore:
- S Pass and Employment Pass (EP) holders need to earn a fixed monthly salary of at least $4,000 to sponsor the stay of their spouses and children here.
- P2 Pass holders will no longer be able to bring in their parents or parents-in-law. They may still bring in their spouses and children.
- P1 Pass holders will no longer be able to bring in their parents-in-law. They may still bring in their parents, spouses and children.
And recently, Manpower Minister Tan Chuan-Jin has announced that entry requirements for EP applications targeting foreign PMETs will be tightened further this year.
MAS, which uses its exchange rate to manage inflation, also stuck to a policy of allowing gradual gains in its currency despite the economy unexpectedly contracted last quarter. “The appreciating stance of exchange rate policy since April 2010 has helped to dampen imported inflation, temper the build-up of inflationary pressures and anchor inflation expectations,” MAS said.
“Overall employment growth will moderate, as supply constraints in both the foreign and local labor forces become more binding,” MAS said. “With more firms turning to locals to fill job vacancies, resident wages will rise at a slightly faster pace across all sectors. As a result, unit labor costs will continue to increase, despite some improvement in productivity.”
Overall wage growth could average 3 percent in 2013, compared with 2.3 percent in 2012, MAS said.
MAS also said that GDP may expand 1 percent to 3 percent this year while inflation may be between 3 percent and 4 percent. The Singapore economy shrank an annualized 1.4 percent in the three months through March 31 from the previous quarter.
In another revelation, MAS said that Singapore economic activities last year was mainly driven by “internal drivers”. It said, “The sources of growth for the Singapore economy will be more balanced between internal and external drivers (this year) compared to last year, when growth was predominantly driven by the former.”
TR Emeritus
*Article first appeared on www.TREmeritus.com