Business groups welcome the move to raise local retail staff’s wages but say added cost is a concern

SINGAPORE- Raising the wages of local retail staff is a welcome move, but taking on more costs will likely be a concern amid the challenging business operating environment, business associations said on Monday (Aug 15).

This comes after a slew of recommendations announced by the Tripartite Cluster for Retail Industry (TCR) on Monday under the Progressive Wage Model (PWM) in a move to boost low wages in the sector.

The wage increase will see local workers getting salary increases of 8.4 per cent to 8.5 per cent annually, from Sept 1 this year up to Aug 31, 2025.

Singapore National Employers Federation executive director Sim Gim Guan said the wage growth may help to attract part-timers and meet the sector’s manpower needs.

But with the higher business costs that employers are already facing due to factors such as inflation, they would be concerned about absorbing costs or passing them on to consumers as this would affect their competitiveness, he said.

Support measures from the Government, such as the Progressive Wage Credit Scheme, will hopefully help to mitigate the impact of the wage increases.

The Singapore Retailers Association (SRA) said the wage increases will help make the sector a more attractive career choice.

But labor costs have risen substantially even before the implementation of the PWM, said SRA executive director Rose Tong.

With employers having to pay a minimum wage, competition for local workers will also become more intense, adding to the difficulty in finding local workers.

Ms Tong added: “It will also be more expensive for smaller retailers, such as neighborhood shops, to hire. Those who pay more with better employer branding and staff benefits will be better positioned to attract retail talents and retain existing staff.”

Bigger retailers, such as fashion chain Uniqlo, have already taken steps to boost staff wages to attract and retain talent.

Uniqlo Singapore’s human resource director, Ms Juliana Tan, said the company had bumped up all its store employees’ salaries by an average of 23 to 25 per cent in June. It has about 1,200 Singaporean and permanent resident employees islandwide.

The PWM will help to keep the sector attractive to locals, but the fashion chain has also put in place training opportunities for its staff, she added.

Singapore Business Federation chief executive Lam Yi Young said while the recommendations by the TCR are welcomed, retailers will also need to take steps to make sure these wage increases are sustainable.

He said: “Retailers need to press on with transformation efforts to increase productivity and grow and diversify their supply chains and markets. This is especially important in the face of rising inflation and cost pressures.”

The current inflationary environment will continue to put pressure on wages, said Professor Lawrence Loh from the National University of Singapore Business School.

While the wage growth increases are significant and commendable, wages are dynamic and will nevertheless be adjusted by market forces.

He said: “The competition for labor will continue to intensify as many markets transit out of the pandemic. Retailers may even have to consider increases over and above those offered by the PWM to attract workers.”

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