Chart of the day: Check out how rising labour costs are clipping productivity growth

Limiting entry of foreign workers is taking a toll.

Singapore businesses continue to be weighed down by climbing labour costs in tandem with the limits imposed on the entry of low-skill, low-wage foreign workers.

According to a report by the Deloitte University Press, the city-state is hounded by both the cyclical problem of lacklustre global demand as well as structural problems of an ageing population and competition from economies that have a cost advantage.

While the latter could be tackled through transition to value creation and increased value addition, Deloitte University Press asserts that skyrocketing labour costs, and productivity growth are significant roadblocks.

All is not lost, though, as the report further notes that Singapore’s 2016-2017 budget, declared in March, has been designed these short-term cyclical concerns and long-term structural challenges. The budget contains measures to boost the country’s value-creation, promote small and medium-sized enterprises, and address the demographic challenge through quarterly payout schemes.