F&B operators to brace for higher costs as EP, S Pass salary floors rise

The minimum salary for EP holders will rise to $6,000, and for S Pass to $3,600.

The food and beverage (F&B) sector may face higher operating costs and could raise prices after Budget 2026 tightened salary requirements for foreign workers, according to industry representatives.

Singapore will raise the minimum qualifying salary for Employment Pass (EP) holders from $5,600 to $6,000, and for S Pass holders from $3,300 to $3,600. The changes take effect for new applications in January 2027 and for renewals in January 2028.

The Restaurant Association of Singapore (RAS) said these changes, along with an increase in the local qualifying salary (LQS), will add pressure to already tight margins in the F&B sector.

Employers must brace for a further increase in the cost of doing business, said Benjamin Boh, President of RAS.

“Businesses must review their P&L, factoring in these new realities and see how best to absorb the increase in cost,” he said. “We expect that many players will have to increase prices to absorb some of these costs in order to stay in business.”

Although the Progressive Wage Credit Scheme (PWCS) and Senior Employment Credit have been extended, Boh noted that the higher qualifying salary increase under PWCS means fewer employers will benefit.

“Whilst digitalisation is also another way to find efficiencies, many in the industry have already embarked on that journey, so there might not be much more efficiencies to squeeze from that,” he added.

However,  Lily Cheang, Partner, People Advisory Services Tax, Global Immigration, Ernst & Young Solutions LLP, said the adjustments “reinforce the government’s continued focus towards a higher quality and more competitive workforce.”

“Businesses will need to reassess manpower strategies, manage cost impacts, and deepen local talent development to stay aligned with the evolving requirements,” Cheang said.

Meanwhile, Christina Karl, Immigration Leader at Deloitte Singapore and Global, said the higher EP and S Pass salary thresholds show that foreign professionals must be paid at levels that reflect real skills and value, and should support — not compete with — local workers.

“By requiring employers to pay locals at or above the revised LQS before they can avail of the S Pass quota, the government is nudging firms to invest more meaningfully in their Singaporean core, instead of relying on "token" local hires to support a larger pool of foreign S Pass holders,” Karl added

Rental impact

Beyond the F&B sector, property consultants warned of potential spillover effects on the rental market.

Mark Yip, CEO of Huttons Asia, said higher qualifying salaries for EP and S Pass holders may influence the hiring of foreigners, which could have a knock-on impact on rental demand for both HDB flats and private residential properties.

“Rents of HDB and private residential properties may face downward pressure of up to 3% in 2027 and 2028 if demand fails to keep up with supply,” he added.