Government to lower foreign worker quota in services sector

Services

To keep Singapore’s services sector competitive, some measures will be enforced so that Singaporeans will continue to have “good jobs and opportunities,” said Finance Minister Heng Swee Keat in his Budget 2019 speech on 18 Feb.

The Dependency Ratio Ceiling (DRC) – the maximum ratio of foreign workers to the total workforce in a company allowed, will be tightened for the services sector; from 40 percent to 38 percent on 1 Jan 2020, and to 35 percent on 1 Jan 2021. The DRC for the other industries remained unchanged, Mr. Heng elaborated.

He also added that the quota for S Pass Sub-DRC – mid-skilled foreigners earning at least $2,300 a month would also be reduced from 15 percent to 13 percent on 1 Jan 2020, and to 10 percent on 1 Jan 2021.

Notably, the S Pass growth in 2018 for the services industry was the highest in the past five years, and that it will not be sustainable, Mr. Heng expressed his concern. Instead, he suggested that all Singaporeans must upgrade themselves and build deep enterprise capabilities to meet rising global competition.

As for firms whose existing workers exceed the new limits, the DRC will apply when they want to renew their permit.

To help firms adjust to the impending policy changes, the Enterprise Development Grant (EDG) and the Productivity Solutions Grant (PSG), which have a funding cap of 70 percent, will be extended for three years up to 31 Mar 2023. The former funds projects for firms to improve efficiency and internationalize, and the latter subsidies the cost of off-the-shelf technology to help firms boost productivity.

More details on the changes will be announced by the Ministry of Trade and Industry (MTI) and the Ministry of Education (MOE) Committee of Supply on a later date.

Meanwhile, there will be no changes to the foreign worker levy rates this year, Mr. Heng said. The supposed increase in levy rates for the marine shipyard and process sectors will be put off till next year.

Additionally, the Career Support Program – which provide wage support for employers to hire Singaporeans who are retrenched or long-term unemployed, will be extended for two more years.

To help Singaporeans thrive in this “competitive and technology-intensive environment,” a budget of $3.6 billion has been set aside over the next three years. New professional conversion programs will also be launched to help workers move into careers in growth areas.

To all business owners, don’t say bo warning ah. You all got one year to prepare for the change.


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