Singapore reduces foreign workers quota in manufacturing sector

Aiming at moderating the country's reliance on foreign labour, the Singapore government on Tuesday announced that the S Pass quota for foreign workers in manufacturing sector will be cut from 20 per cent to 15 per cent in phases over the next two years.

The S Pass allows mid-level skilled foreigners to work in Singapore. Workers on S Passes must earn a fixed monthly salary of at least $2,500 and are typically degree or diploma holders, such as technicians.

From January 1 next year, firms in the manufacturing sector can have only up to 18 per cent of their workforce be foreign workers on S Passes, Deputy Prime Minister Heng Swee Keat said in his Budget speech.

This quota will be further cut to 15 per cent from January 1, 2023, said Heng, who is also the Finance Minister. It is currently 20 per cent.

The overall quota -- comprising workers on work permits and S Passes -- for manufacturing will remain at 60 per cent, The Straits Times reported, citing the budget presentation in Parliament.

The move is part of the government's efforts to moderate Singapore's reliance on foreign labour where it must, the report quoted Heng as saying.

At the same time, the government will support the employment of Singaporeans and the deepening of their capabilities while promoting the transfer of capabilities from foreigners to locals, he said.

Heng acknowledged that some Singaporeans are concerned about the nation's reliance on foreigners and competition from them. But at the same time, many businesses and trade associations have said that it is difficult to hire locals, and asked for foreign worker quotas not to be tightened further so that they can remain globally competitive.

"The way forward," he said, "is neither to have few or no foreign workers, nor to have a big inflow. We have to accept what this little island can accommodate."

"To strike a balance, we must focus on enhancing the complementarity of local and foreign manpower, and step up on industry transformation," the minister said.

One of the levers the Singapore government uses to manage the size of the foreign workforce is the S Pass quota, or the sub-dependency ratio ceiling, which is the proportion of S Pass holders a firm can employ.

In the Unity Budget last February, Heng had said that the S Pass quota in the manufacturing sector would be cut when conditions allow.

The move has been carefully calibrated to give firms a year to adjust, he said in the House.

The manufacturing sector employs about 450,000 workers, or about 12 per cent of the workforce, with median wages about 10 per cent higher than the economy-wide median.

The S Pass quota for construction, process and marine shipyard firms was lowered to 18 per cent on January 1 this year, and will be cut further to 15 per cent from January 1 in 2023, as announced in the Budget last year.

Heng said the government will continue to review the S Pass framework, including the qualifying salary and levies, to maintain the complementarity of locals and foreigners in the workforce.

Separately, the Capability Transfer Programme will also be extended up to end-September 2024 to boost Singaporeans' skills. It provides up to 90 per cent funding for company or industry projects to bring in foreign specialists to train locals or send local workers for overseas training attachments, in areas where Singapore lacks expertise.

Singapore will also spend around SGD 24 billion over the next three years to help firms and workers adapt to the changing global landscape brought on in part by the pandemic.

The funds will go towards building a more vibrant business sector and innovation ecosystem, helping businesses to transform and scale up their operations, and creating opportunities for workers.

Heng said Singapore must deepen its position as a global-Asia node to emerge stronger from the COVID-19 crisis.