Budget 2026: Restaurant association seeks help with labour cost, to control excessive rent increases

SINGAPORE - The Restaurant Association of Singapore (RAS) called on the Ministry of Finance to help the food and beverage (F&B) industry with further labour cost subsidies, as well as for the authorities to implement policies to control excessive rent increases.

Specifically, it asked for Progressive Wage Credit Scheme (PWCS) subsidies to be increased to 75 per cent for 2026 to 2028, from

50 per cent now

. Its other Budget 2026 recommendations include the removal of foreign worker levies, a shorter wait for payouts of government subsidies under PWCS and more funding to support employees’ parental leave.

As the sector continues to grapple with a “perfect storm of rising costs, labour shortages and shifting consumer habits”, RAS said on Jan 19 in a press statement that it seeks the Government’s intervention to enhance cost predictability and stimulate domestic demand within the F&B sector.

Citing the sector’s contraction in 2024 and

record-high business closures

, it added that the long-term viability of F&B businesses, particularly small and medium-sized enterprises (SMEs), is threatened.

Under the PWCS, the Government co-funds the wage increases at each Progressive Wage Model (PWM) rung from 2022 to 2026 to help soften the impact on companies.

During Budget 2024, Finance Minister and then Deputy Prime Minister Lawrence Wong announced that the co-funding levels

would be increased for 2024

from a maximum of 30 per cent to 50 per cent.

PWCS payouts to businesses are currently disbursed yearly.

RAS said it hopes for more regular and timely PWCS payouts to help with cash-flow management as SMEs and low-price operators struggle to absorb mandatory wage hikes while facing depressed revenue.

The restaurant association is also urging the Government to remove foreign worker levies, as the PWM has been implemented since July 2023 and sets a wage floor. It added that the initial policy intent of using levies to prevent wage depression “may now be redundant”.

RAS also asked for additional Government funding and support for businesses to offset the financial burden of increased paid maternity and paternity leave. It said small businesses face high costs when finding and funding temporary replacements while their workers are on parental leave.

Helping F&B operators with rental costs

Another recommendation is centred on rental stabilisation as rental fees continue to be a major fixed cost for the industry. RAS noted that providing “essential cost predictability” allows businesses to make informed, long-term financial projections and planning.

The association is calling for the introduction of policy interventions that will, for example, control excessive rental renewal price hikes. This can be done by potentially capping increases or tagging them to macroeconomic performance, such as gross domestic product.

RAS also asked for rental data transparency from landlords to be available to tenants as a key part of lease negotiations.

Helping local businesses

To better support local F&B owners, the association has called for stronger measures such as increased foreign worker quotas and streamlined licensing fees. This would help them compete on a more level playing field with the bigger companies, RAS said.

Owners of local brands, which are integral to Singapore being a vibrant culinary and cultural hub, might not have the same resources as foreign brands that are entering the Republic “more aggressively” today.

RAS president Benjamin Boh said that despite an increasingly challenging revenue and cost environment, F&B owners and operators are committed to doing more in food safety, the progressive wage model and digitalisation.

“There is no doubt that a vibrant and thriving F&B industry is key to making Singapore a great country to live in and visit, residents and tourists alike,” he said, adding that the recommendations will give owners and operators some “breathing room” to improve their business structure while surviving the external market pressures.

RAS noted the call for support is driven by the pressing need to ensure the long-term health of the F&B industry and its ability to support broader economic and tourism goals, such as the Singapore Tourism Board’s vision

of achieving

$47 billion to $50 billion in tourist receipts by 2040

.

“The F&B industry’s financial fragility, marked by contracting sales and escalating fixed and variable costs, requires immediate, high-level structural attention.”