Smaller businesses, part-time workers potentially affected by new local qualifying salary standards
The upcoming increase in the local qualifying salary (LQS) for foreign worker employers, set to take effect on July 1, has raised concerns among some smaller businesses, which may be forced to pass on the higher manpower costs to consumers. However, experts suggest that the overall impact of the LQS hike will be limited, as many businesses already pay local full-time workers above the new salary threshold.
The key change in the Budget 2024 concerns raising the minimum salary threshold that employers must pay local workers, which is aimed at improving the wages for lower-income workers. Despite the adjustments, several businesses are already meeting or exceeding the new LQS, particularly those with full-time employees. The impact is expected to be more pronounced for businesses relying on part-time local hires, as they may face difficulties with raising hourly wages or adjusting work hours to meet the new salary requirements.
Ang Yuit, president of the Association of Small and Medium Enterprises (ASME), noted that businesses paying part-time employees lower wages, such as S$9 per hour, may be forced to increase their rates or adjust work schedules. This could lead to additional operational challenges, particularly for businesses with tighter margins. Although the government has provided various support schemes, the adjustment to the LQS remains a concern for small business owners who rely heavily on flexible part-time labor.
The broader economic effect of these adjustments is still under evaluation, but the LQS increase is expected to raise wages for some workers, thereby benefiting the overall economy in the long term. However, the immediate consequences could put pressure on smaller businesses that may struggle to adapt quickly to the new wage standards.
