Singapore to Reduce Foreign Worker Quota for Manufacturing Sector

Posted by Written by Ayman Falak Medina Reading Time: 3 minutes
  • Singapore will reduce S-Pass quotas for foreign workers for the manufacturing sector from 20 percent to 15 percent by January 2023.
  • The move is part of the government’s efforts to moderate Singapore’s reliance on foreign labor while still drawing frontier investments into the sector.
  • The government has extended a number of programs to assist businesses in reskilling their local workforce.

Singapore will begin reducing the foreign worker quota for the manufacturing sector over the next two years, according to the 2021 budget.

The government will cut the S-Pass sub-Dependency Ration Ceilings (DRC) from the current 20 percent limit to 15 percent in January 2023. The DRC is the permitted ratio of foreign workers to the total workforce a local business is allowed to hire and S-Pass workers are classified as mid-level skilled international workers earning at least S$2,500 (US$1,881) per month.

Furthermore, the foreign worker levy rates for services, marine shipyard, and construction were reduced to 18 percent, starting January 1, 2021, and will be cut to 15 percent in January 2023.

Why cuts to Singapore’s foreign worker quota have been announced now?

The move is part of the government’s efforts to moderate Singapore’s reliance on foreign labor, particularly as the unemployment rate soared to 4.1 percent in 2020 — although this could have reached 6.1 percent if not for the fiscal and monetary policies issued throughout that year.

Businesses will not be required to dismiss their excess foreign workers immediately when the new quotas take effect but can retain them until their individual S-Passes expire. This will ensure firms have the time to meet their new manpower quotas.

Singapore aims to grow local advanced manufacturing capacity

Singapore’s manufacturing sector contributes to 21 percent of the GDP or S$106 billion (US$79.7 billion) annually; key industry clusters include electronics, biomedical sciences, pharmaceuticals, and logistics and transport engineering.

The government is seeking to grow this sector by 50 percent over the next 10 years so that advanced manufacturing makes up the biggest share of the industry. To do so, the government aims to attract more Singaporeans into the sector while also expanding its capabilities to draw in frontier investments. Leading multinationals from Shell and Merck to Micron are just a few examples of firms choosing Singapore as a strategic manufacturing hub.

Singapore’s pharmaceutical and biomedical sectors are fast-becoming the drivers of manufacturing growth. The country is only one of a few in the world that exports more pharmaceutical products than it imports. Singapore is also home to more than 50 pharmaceutical manufacturing facilities, which includes eight of the world’s largest pharma companies.

International businesses are enticed by Singapore’s skilled and adaptable workforce that is consistently ranked among the world’s highest in the Global Talent Competitiveness Index. In addition, the country’s well-developed infrastructure as well as its business and investor-friendly legal and tax regimes has attracted more than 37,000 international companies and 7,000 foreign multinationals.

Skilling locals to support investment-led growth

To support the employment of more Singaporeans, the government has extended several programs that assist with the reskilling of workers as well as subsidizing wages.

The Wage Credit Scheme (WCS) has been extended for 2021 in which the government will co-fund 15 percent of qualifying wage increases of up to a gross monthly wage ceiling of S$5,000.

The Capability Transfer Program will also be extended until September 2024. Under this program, the government will fund up to 90 percent of costs for projects to bring foreign specialists to train Singaporean workers, or send local workers overseas for training.

Other measures to help workers were introduced in the Resilience Package on February 16, 2020. Through this support package, the government has pledged an additional S$5.4 billion (US$4.08 billion) to extend the SGUnited and skills packages (SGU JS), which have also been extended for 2021.

The SGU JS programs provide transitional upskilling and employment facilitation support to local workers. The program has facilitated nearly 76,000 individuals into acquiring jobs, skills training, and traineeships as of December 2020.

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