Singapore has to secure long-term economic growth while dealing with labour force issues: Panel

SINGAPORE - More than eight in 10 business leaders said after Budget 2025 that they were satisfied with the help provided, according to the Singapore Business Federation (SBF).

But in the long term, they would like even more assistance with issues like manpower costs, said Mr Musa Fazal, SBF’s chief policy officer, sharing the feedback from the ground.

One area in particular where companies hoped to get more support was regarding foreign workers, he said.

“Manpower issues continue to be a key concern for businesses – manpower costs, manpower availability. Many businesses still rely on foreign manpower… to augment their local workforce.

“There’s a lot in the Budget about how we can upskill and upgrade the local workforce, but on the foreign manpower side… could (S Pass levies and qualifying salaries) be deferred in order to relieve some of the cost pressures on businesses?” Mr Musa said.

He was speaking at a post-Budget panel organised by The Straits Times as part of The Usual Place podcast. Minister in the Prime Minister’s Office Indranee Rajah and labour economist Walter Theseira from the Singapore University of Social Sciences were also on the panel.

Looking ahead, Singapore has to secure long-term economic growth through increasing productivity while dealing with labour force issues, the panellists said.

Mr Musa said that businesses welcomed the measures announced in 2025, especially the corporate income tax rebate, which would help to address some of the immediate short-term cost pressures that they are facing.

Prime Minister Lawrence Wong introduced

a 50 per cent corporate income tax rebate in the year of assessment 2025.

Every active company that employed at least one local employee in 2024 will get a minimum benefit of $2,000. The total benefit that each company will receive will be capped at $40,000.

According to Mr Musa, SBF had asked if some of the foreign manpower rules could be liberalised to help companies that are going through transformation and need a bit more time to become more lean and productive.

Ms Indranee said it is about getting the economy going.

“If the economy grows, then that means more jobs, more opportunities, better income,” she said.

Regarding income, Associate Professor Theseira said the way for workers to get over the cost-of-living hurdle is to put in place the foundations for long-term wage growth.

People having jobs that provide sustainable real wage growth is the most important thing to ensure their standards of living are improving, he added.

“But in the short term... there have been some periods where global inflation has run much higher, much faster than wages were able to keep up. Now, in the most recent year or so, at least wages were able to keep ahead for inflation. (In) the last couple of years, it was kind of like neck and neck, barely ahead, and that is where I think Singaporeans want or expect the Government to help,” he said.

Such help has been provided in the form of CDC vouchers, for instance.

In the longer term, it is really about finding better jobs and upskilling, which is where the Budget also does put in a framework to help Singaporeans achieve that, Prof Theseira said.

Mr Musa said companies also appreciated the top-ups in various funds intended to support research and development, infrastructure and future energy – all of which are important to support Singapore’s economic competitiveness over the longer term, he added.

Noting that the Budget has an important role to play in laying the groundwork for Singapore’s economy to be successful, Prof Theseira said that growing the economy goes together with ensuring that Singapore is a choice destination not just for Singaporeans, but also for investors, capital and highly skilled talent.

Mr Musa agreed that it is economic growth that will be the anchor for a secure revenue base over the longer term.

“An economist will tell you that economic growth is a function of two things. One is labour force growth and the other is productivity. We were talking quite a bit about fertility rate and our shrinking labour force. So quite apart from the fact that we have a low fertility rate, we also have an ageing population,” he said.

“So, trying to think about how we can maximise the use of our local labour force is quite critical… We have to double down on productivity and try to see how we can transform the economy to stay ahead.”

That said, Mr Musa noted that Singapore is a small economy with many constraints, such as those related to land, labour, and energy, which includes clean energy concerns.

“So, we have to think about how, as an economy, we can overcome some of these constraints, and how we can continue to create value – a value premium that justifies people wanting to continue to invest in Singapore, justifies (companies) wanting to start new businesses in Singapore.”

These constraints have to be overcome amid great competition, Mr Musa added.

“We have to run the race, and we have to run it faster than others around us. Many of them are catching up, and so we also have to bear that in mind and continue to think of new ways in which we can create value for Singapore and sustain that value over the long term,” he said.