SINGAPORE - The tight labour market will continue to drive up wages even though productivity growth remains lacklustre, the Monetary Authority of Singapore said.
In its biannual Macroeconomic Review released on Tuesday, the central bank warned that cost pressures will continue mounting as firms grapple with ongoing restructuring.
Firms in all sectors will continue to face manpower shortages, especially as the demand for workers in domestically-oriented services industries like healthcare continues to rise.
This, couples with muted productivity growth amid a sluggish global economy, means labour costs will continue rising. Companies in certain industries will find it easier to pass on these higher costs to consumers, the MAS said.
Firms which are mainly domestic-focused such as those selling entertainment and prepared food, have found it easier to raise product prices.
Companies which face less competition - both within Singapore and abroad - have also hiked prices, said the central bank.
Meanwhile, competition and tepid global demand have kept a lid on price increases in export-dependent sectors.