Data on Business Costs

Mr Inderjit Singh asked the Minister for Trade and Industry (a) if he can provide data on the trend of business costs over the last five years, particularly data showing the changes in labour costs and rental costs; and (b) whether this trend creates a problem for SMEs to remain viable in the Singapore economy.

During the period 2007-2011, nominal average monthly earnings (AME), as a proxy for labour costs, increased at a compound annual growth rate (CAGR) of 3.5%. Rentals of factory space increased at a CAGR of 7.3%.

Although costs have increased, firms have coped through restructuring and improving productivity. Over the same period, the unit labour cost (ULC), which measures the labour cost required to produce one unit of output, for the overall economy grew at a more moderate pace of 1.5% (CAGR), while the ULC for the manufacturing sector declined 2.9% (CAGR).

The Government recognises that business costs have generally increased. Overall, Singapore is no longer a low-cost business location. The Government has put in place broad-based and sector-specific programmes to help businesses remain competitive through upgrading their capabilities and improving their productivity, thereby moderating cost concerns. SMEs which restructure by moving up the value chain and increasing their productivity will continue to remain viable in the Singapore economy. The Table below captures the statistics mentioned.