Small businesses at breaking point over skyrocketing wages

But big firms have another concern.

Most Singapore firms are reeling from steadily escalating manpower costs. The Singapore Business and Financial Strategy Survey 2014 released today by the Singapore Business Federation and American Express showed that an increasing number of local firms continue to struggle from headwinds arising from the tight labor market.

Escalating business expenditures on manpower, rental and compliance, as well as suitable labour supply and intense industry competition, topped the list of challenges among survey respondents.

Reeling from the recent changes to foreign workers policies, a tightening labour market with demand for high wages by locals, rising manpower costs also remains a prevalent issue for micro (71%), small (96%) and mid-sized (98%) enterprises.

Larger enterprises which are financially stronger and more competitive in overcoming cost issues are comparatively more concerned with the lack of suitable manpower (95%).

Most enterprises, especially small, mid-sized and large enterprises are forward-looking in overcoming domestic challenges.

Majority are looking to increase their operations internationally, particularly into emerging markets within the region (i.e. ASEAN) in the next year, with plans to migrate functions related to production, as well as expand sales and distribution activities.

According to Victor Tay, Chief Operating Officer, Singapore Business Federation“Ongoing manpower issues and escalating business costs are driving Singapore enterprises to re-look their strategies moving forward. . In the face of increased competition, businesses will have to band together in consortium to increase their economy of scale.”