Energy cost surge squeezes employers' margins and delays hiring, SNEF poll says

Almost all firms reported higher costs with utilities and fuel most affected categories.

Most Singapore firms are facing higher operating costs as energy prices push up utilities, fuel, materials, and freight expenses, with a minority starting to freeze hiring and cut benefits, according to a Singapore National Employers Federation (SNEF) poll.

The snap poll found that 96% of employers are dealing with higher operating costs, whilst more than half, or 53%, also flagged manpower costs as a key concern.

Nearly one in five employers, or 19%, reported cost increases exceeding 25%. Another 41% recorded increases of 11% to 25%, whilst the remainder saw rises of 1% to 10%.

Utilities and fuel were the most affected cost components, each cited by 70% of respondents. Materials and supplies were cited by 59%, whilst air and sea freight was cited by 53%.

Employers said higher energy prices are feeding through into wider business costs, including raw materials, supplies, and logistics. Firms in hospitality, food and beverage, and retail also reported higher temporary labour costs as the market adjusts to a higher-cost environment.

Despite the pressure, 83% of respondents said they had not made changes to staffing or work arrangements in response to higher energy prices.

Amongst those that have acted, 67% have deferred hiring or expansion plans. Another 33% have redeployed or cross-trained staff, whilst 33% have reduced headcount through natural attrition.

About 25% have cut bonuses, allowances, or benefits, whilst 19% have reduced work hours, overtime, or shifts.

The SNEF said these measures reflect efforts to manage costs whilst preserving jobs.

Employers remain cautious about the outlook, with 39% expecting business conditions to worsen over the next six to 12 months.

When asked about support, 83% of respondents pointed to tax relief or financing assistance as most useful if energy prices remain high. A further 77% called for energy cost relief and subsidies, whilst 55% said manpower policy changes that add cost pressure should be delayed.

Hao Shuo, Chief Executive Officer of SNEF, said employers remained concerned about rising manpower costs and the impact of energy prices on overall expenses.

He said policy implementation should consider prevailing economic conditions and called for tiered support under the Progressive Wage Credit Scheme for employers raising wages for lower-wage workers.