As part of its effort to reduce the country’s dependence on foreign workers, and to increase the number of locals in the workforce, the Singapore Government has introduced new measures to tighten foreign worker quotas.

Impacted Industries

An estimated 500 employers in the manufacturing and 8,500 employers in the services industry will be impacted by the adjustments.

Companies in the manufacturing sector will see their Foreign Worker Dependency Ratio fall from the current 65% to 60%.  This means that employers will only be able to employ foreign workers to a maximum of 60% of their total workforce (calculated as Singaporean, Permanent Resident, ‘S’ Pass, and Work Permit holders).

Employers in the service industry will also see a cut in the Dependency Ratio from 50% currently to 45%.  Additionally, the ratio for ‘S’ Pass Holders will also be reduced from the present 25% to 20%.

Timelines for Implementation

The adjustments will take effect on 1 July 2012, at which time companies in the manufacturing and services sector will not be able to employ any more foreign workers if this would exceed the new quotas.  Employers whose existing pool of foreign workers already exceed the new quotas will be given until 30 June 2014 to make adjustments to their workforce and to fall within the new quotas.

Foreign Worker Levys

While there will not be any changes to the foreign worker levy in the short term, this may change in June 2013, depending on the rate of growth of foreign workers in the next year.

HR Action Plans

Given the increased difficulty of hiring foreign workers, it is timely for local companies to review how more locals can be attracted into the manufacturing and services industry.  Some suggestions are provided here:

  • Adjust salaries upwards.  These should be commensurate to job size and job value;
  • Redesign jobs to eliminate or reduce undesirable elements of the work, such as heavy lifting or physical danger;
  • Introduce flexible working arrangements to expand the talent pool; and
  • Review employee benefits to take into account the different needs of local workers, and workers of different age groups.

Contact us for more information on how jobs in your company can be more attractive to local workers.