Retailers heave a sigh of relief as manpower woes wane

Firms are shaping up to the new normal.

Retailers have been the unwilling poster child of Singapore’s severe manpower crunch. Shops were forced to downsize amid waning sales and a shrinking labour pool, and the sector shed almost 5,000 jobs in the first quarter alone.

Despite the dispiriting figures, analysts from CIMB believe that retailers may be approaching the tail-end of the labour crunch.

This is because all firms are expected to be compliant with the reduced Dependency Ratio Ceiling (DRC) as of last month. This means that the worst of store closures should be already be over, and retailers should already be operating with fewer foreign staff.

“We think that the labour crunch is abating. With all firms expected to have complied with the reduced DRCs in Jul 2015, we believe that firms have been consolidating in anticipation of this change and expect further store closures stemming from the labour shortage to abate in 2H15,” CIMB said.

Retailers should also get some breathing room from the delay of the foreign levy increment to July 2016, which was announced in the Budget 2015.

“After 1 Jul 2015, we think the worst of the labour issue will be over,” CIMB said.