Budget 2026 in Singapore wins praise for AI, but labour-heavy sectors warn of cost hit

Business leaders in Singapore have welcomed Budget 2026 for strengthening the push into artificial intelligence (AI) and globalisation. However, labour-intensive industries are warning that higher costs for foreign workers could squeeze margins and lift prices for consumers.

Restaurants and retailers, which often struggle to hire enough local staff, say the changes may translate into more expensive meals and higher operating costs.

What changes for Employment Pass and S Pass salaries

From 2027, hiring foreign employees will become more costly.

The minimum qualifying salary for Employment Pass (EP) applicants will rise from $5,600 to $6,000. The qualifying salary for S Pass holders will increase from $3,300 to $3,600.

An Employment Pass is a work visa for foreign professionals, managers and executives. An S Pass is a work visa for mid-skilled foreign workers.

The new thresholds were announced by Prime Minister and Finance Minister Lawrence Wong in his Budget 2026 speech on Feb 12.

Keeping Singapore open while prioritising locals

Mr Wong framed the move as part of a broader strategy.

The goal is to keep Singapore open to global talent and expertise, while ensuring Singaporeans remain at the core of the local workforce.

Business groups broadly support the direction. Still, some sectors say the near-term impact on costs will be hard to absorb.

Restaurants warn of price increases

The Restaurants Association of Singapore (RAS) said the pressure will be felt quickly on the ground.

Mr Benjamin Boh, RAS president, said many businesses may have to raise prices to remain viable.

“Many players will have to increase prices to absorb some of these costs in order to stay in business,” he said.

He added that while digitalisation can improve productivity, much of the industry has already invested heavily in it. That leaves fewer easy gains to offset higher labour costs.

Retailers say the squeeze is getting tighter

The Singapore Retailers Association (SRA) also raised concerns.

It noted that business expenses have already climbed in recent years, driven by trade tariffs, domestic wage inflation and competitive pressures. Higher foreign worker salary requirements could add another layer of strain.

Budget 2026’s tilt toward AI and openness has won support from business leaders. Yet for restaurants and retail, the coming rise in foreign worker costs is sharpening a familiar dilemma: absorb the hit, or pass some of it on to customers.