THE higher minimum salary that employers of foreign workers must pay local employees, which kicks in Jul 1, may cause some smaller businesses to pass on higher manpower costs to consumers, observers said.

But the overall impact of this higher local qualifying salary (LQS) may be limited, because few full-time workers’ salaries are below the new minimum, they added. Instead, businesses that rely more on part-time local hires could be hit harder.

“I may pay part-timers S$9 per hour, but with LQS, I either have to increase the part-time pay, or make the person work longer, which they may not wish to do,” said Ang Yuit, president of the Association of Small and Medium Enterprises (Asme).