Approximately 42,000 businesses closed down in Singapore during 1H 2016, which would have also displaced many employees.
This compares to 49,000 during the entire year in 2015.
There are a couple of reasons behind these numbers, such as:
- Higher wages, which makes it harder for companies to remain profitable. Singapore’s wage costs are at around 43% of GDP, a level which was seen before recessions in 1985, 1997 and 2001. Also the Unit Labour Cost Index reached an all time high of 116.7 in 2Q 2016.
- The state of the global economy and its impact on export oriented Singapore.
According to a report by Reuters, the rise in wages is partly due to the stance of lowering the number of foreign workers in Singapore. This has led to a shortage of talent in various sectors and also lower productivity.
“Anecdotally, companies are known to have hired token locals – employees needed to meet quotas so that the company can hire another foreigner,” stated Lee Quane, Asia Director at ECA International, a recruitment firm.