2025 NYJC Paper 2 - Mark Scheme

2025 NYJC JC2 H2 ECONOMICS PRELMINARY EXAMS PAPER 2 The Restaurant Association of Singapore (RAS) reports that many food and beverage (F&B) outlets are understaffed by 20% to 30% even after offering salary increases of 25% to 30%. This persistent problem is attributed to a combination of factors, including Singaporeans' reluctance to take on F&B jobs due to long hours and physical demands, and tightened border controls limiting the number of foreign workers. Source: RAS, 2025 (a) Explain why a shortage of F&B workers might still exist even with the rise in the salaries of F&B workers. [10] (b) Discuss possible measures Singapore government can adopt to overcome future shortages of F&B workers. [15] Suggested answer: (a) Explain why a shortage of F&B workers might still exist even with the rise in the salaries of F&B workers. [10] Question Analysis Command Explain why (process explanation) Content ● Demand, Supply, shortage ● PED, PES Context - F&B workers Synopsis: R1: Shortages might still exist due to inelastic demand and supply of F&B workers R2: Shortages might still exist due to increase in demand and/or fall in supply of F&B workers Introduction: Define shortages: Shortages arise when the quantity demanded for F&B workers exceed the quantity supplied of F&B workers. Approach to question: [can differ depending on the approach adopted by the students] The shortages might still exist due to inelastic demand and supply of F&B workers, and the increase in demand and/or fall in supply of F&B workers. Define key terms Approach to answer R1: Shortages might still exist due to inelastic demand and supply of F&B workers ● Define P(W)ED: Measures the responsiveness of quantity demanded for F&B workers with respect to a change in salary (wage) of F&B workers, ceteris paribus. ● Inelastic P(W)ED: PED for F&B workers is inelastic as the role of F&B workers is essential. They are the backbone of a thriving hospitality sector, playing a crucial role in both the operational and customer-facing aspects of food and beverage businesses. They ensure smooth service, maintain hygiene standards, and create positive customer experiences, which are vital for the industry's success and reputation. ● Due to the role of F&B workers being a necessity in hospitality services, the increase in wage of F&B workers will lead to a less than proportionate fall in [ACCURACY] Accurate definition of PED/PES.

quantity demanded for F&B workers, making demand for F&B workers price inelastic. ● Define P(W)ES: Measures the responsiveness of quantity supplied of F&B workers with respect to a change in wage of F&B workers, ceteris paribus. ● Inelastic P(W)ES: ● The supply of F&B workers is often considered price inelastic because it's difficult for businesses to quickly increase the number of workers in response to wage increases. ● Supply F&B workers is price inelastic as it takes time for individuals to decide to enter the F&B industry, complete necessary training, and gain experience. They need to be trained and certified by the relevant authorities before they can be employed. More specialized roles, like sommeliers or chefs, require much more extensive training, potentially spanning many years. ● At the same time, due to the long hours and physical demands, the F&B sector has difficulty attracting workers. ● Hence, an increase in the wage of F&B workers will lead to a less than proportionate increase in quantity supplied of F&B workers, making supply price inelastic. ● Given the inelastic demand and supply of F&B workers, the current market wage of F&B workers is not high enough to meet the shortages. ● With reference to the figure above, the current market wage of F&B workers is at W0. However, at this wage, the quantity demanded for F&B workers is at Q1 while the quantity supplied of F&B workers is at Q0 resulting in a shortage of Q0Q1. Even with the increase in wage rate to W1, the quantity demand of F&B workers will only fall less than proportionately. At the same time, the higher wage rate only increases the quantity supplied of F&B workers less than proportionately as well. Hence, the shortage of F&B workers continues to persist (Q2 Q3) unless a much higher wage rate is achieved in order to eliminate this shortage. [DEPTH] Answer should be contextualised to the F&B workers. [CLARITY/DEPTH] Clear explanation of diagram and why shortage still exist despite increase in wages.

R2: Shortages might still exist due to increase in demand and/or fall in supply of F&B workers ● Increase in demand for F&B workers ● There could be an increase in demand for F&B workers due to growing affluence and convenience of eating out. ● Higher disposable incomes lead to more discretionary spending, and a significant portion of this is directed towards dining experiences. ● Busy lifestyles and a preference for convenience have fueled the growth of eating out. ● As incomes rise and lifestyles become busier, more people choose to eat out, driving up the need for F&B workers across all levels of the industry, from chefs and cooks to servers and delivery personnel. ● This will lead to an increase in demand for F&B workers which is derived from the demand for F&B business. ● In addition, Singapore, as a popular tourist destination, experiences a surge in demand for F&B services during peak seasons and events. This influx of visitors, combined with the city-state's status as a business and convention hub, increases the demand for F&B workers. ● This increase in demand for F&B workers is represented by the rightward shift of the demand curve from D0 to D1. The shortage created at W0 (Q0Q1) will cause an upward pressure on the wage leading to an increase in wage rate of F&B workers. However, while the wage rate is rising to eliminate the shortage, further increase in demand of F&B workers to D2 due to the increasing demand for F&B services, will lead to further rightward shift of the demand curve causing the shortage to persist. [DEPTH] Answer should be contextualised to the F&B workers. [CLARITY/DEPTH] Clear explanation of diagram and why shortage still exist despite increase in wages. Students should consider the SCOPE of the concepts tested

● Fall in supply of F&B workers ● “Tightened border controls limiting the number of foreign workers”: this restricts the entry of new foreign workers and potentially impacting the renewal of existing work permits. This is due to stricter immigration policies and more rigorous screening processes, which can make it more difficult for F&B businesses to hire and retain foreign employees. ● Stricter border controls often involve more stringent visa and work permit application processes, potentially delaying or even preventing the entry of foreign workers. ● E.g.: Singapore has implemented dependency ratio ceilings (DRC) for foreign workers in F&B sector. This means there's a limit to the percentage of foreign workers a company can employ. Tightening border controls can further restrict the number of foreign workers allowed to enter, making it harder for businesses to meet their DRC requirements. ● The fall in supply of F&B workers could be due to long hours and physical demands ● The demanding nature of F&B work, with long shifts and physically strenuous tasks, can lead to burnout and fatigue. This makes it difficult for workers to maintain a sustainable work-life balance, impacting their overall well-being and potentially leading to them seeking employment elsewhere. ● The long and irregular hours, particularly during evenings and weekends, can significantly impact workers' a