The big read: Singapore households and businesses are not immune to the global inflation storm as GST hike looms
“ICE-THIN” PROFIT MARGINS FOR COMPANIES
It’s not just families who are feeling the pinch.
Several business owners said they were feeling increasing cost pressures across several dimensions – labor, logistics, raw materials and electricity.
With many retailers being forced to go online due to COVID-19, digital marketing costs have also increased.
Ms Ling noted that these rising costs are occurring against a backdrop of declining government financial support, such as the Employment Support Program, which provides businesses with wage subsidies and rent waivers.
Mr. Terence Yow, managing director of footwear retailer Enviably Me, said each of those cost items has increased two to three times on average, and costs have increased 12-15% overall.
As the economy recovers from its worst at the height of the pandemic, incomes are still down between 30 and 40%, he said.
“These (companies) that have managed to survive so far … I think we’re just trying to cope with every wave that comes in … What can we do about the freight cost, the labor cost? and the GST? The alternative is to get out, ”said Yow, who is also the chairman of Singapore Tenants United For Fairness, which represents more than 770 business owners.
Mr. Bernard Tay, general manager of Jinjja Chicken, said that operating costs for his Korean fried chicken business increased by 20 to 30 percent last year, compared to 2020.
Describing the costs of food as “crazy”, Mr Tay said the price of a can of cooking oil has increased by 40%.
Traditionally reliant on Malaysian workers, border restrictions have also made it very difficult for it to employ workers, and labor costs have therefore risen to attract them.
“For the first time in my company, I have the quota (to employ foreign workers) but I have no workers… You walk in a shopping center, which restaurant establishment does not post a hiring notice ? And the salary offered is higher and higher. People can literally leave here today and work tomorrow in the same mall at another outlet right next to mine, ”he said.
While returning on-site meals for up to five people has helped improve business, Tay said the safe distance requirement means incomes are still below pre-pandemic levels.
“The margin is so thin as ice,” he added.
Another retailer, Mr Keson Lim, director of toy distribution company Being Kids, also said its trading costs had increased by a similar amount of 20-30%.
In addition to an increase in transportation costs, it faces a labor shortage. Besides the difficulties in hiring foreign workers to replace those who quit to return home, Mr Lim said his traditional reliance on part-time workers has been affected, as many of them are now working as swabs or ambassadors at a safe distance.