Singapore Budget 2019: Foreign worker

DRC to be cut by 5% to 35% by 2021;

foreign levy rates unchanged.

Government plans to restructure Singapore’s economy to boost productivity and

raise income in the lower and middle strata will proceed without change. Foreign
worker levy rate 2019 will also remain the same (including S Pass levy and Work
Permit Levy), and transitional support measures to aid local firms adjust to minor
new changes in foreign workforce policy.

The Singapore Budget will remain largely unchanged moving into the 2019, with
exceptions to cuts in foreign worker quotas for the services sector.

Starting next year, the current DRC ratio (i.e. ratio of foreign to local workers) of 40%
will be cut by 5% by 2021, from an initial 38% (effective 1 January 2020) to 35%
(effective 1 January 2021).

S Pass sub-DRC ratios will also be cut from 15% to 13% effective 1 January 2020 and
to 10% on 1 January 2021. No changes are planned for all other sectors, which will
hold steady at 20%.

In addition, the decision also acts to counterbalance the increase of S Pass holders
participating in the economy. From 2017 to 2018 alone, this number has risen by
2.79% - a trend that has held steady since 2013 and is predicted to continue

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DRC for other sectors unchanged
Dependency Ratio Ceiling (DRC)
Sector Current Changes
Manufacturing 60% No change
Services 40% Will be cut to 38% and to
35% on 1 Jan 2020 and 1 Jan
2021 respectively
Construction 87.5% No change
Process 87.5% No change
Marine Shipyard 77.8% No change

S Pass sub-DRC
Services 15% Will be cut to 13% and 10%
on 1 Jan 2020 and 1 Jan
2021 respectively
All other sectors 20% No change

Foreign worker quotas for all other sectors will remain unaffected for the rest of the
year, with the ratios for manufacturing, construction, process and marine shipyard
sectors standing at 60%, 87.5%, 87.5% and 77.8% respectively.

For existing workers, the new DRC policy will only apply once permit renewals are
made.

Foreign worker levy rate 2019 to remain unchanged for construction sector.

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Marine sector breathes sigh of relief, F&B sector expected to be hit
hardest by squeeze

The decision to retain the DRC at current levels is greeted enthusiastically by the
Marine sector which is seeing a reversal from prolonged depressed oil prices.

The planned reduction in foreign worker dependency will hit heavy players in the
F&B sector most, putting a squeeze on access to foreign workers, both skilled and
unskilled. Despite the squeeze put on foreign manpower, economists are optimistic
that the newest changes should be “manageable” when compared to readjustments
that were needed in between 2010 and 2015.

Some experts have also expressed concern that the planned use of technological
solutions in place of human workers will degrade the industry’s experiential value,
taking away the unique customer experiences that come with real-life interactions.

Foreign Worker Levy rate 2019 to remain unchanged, proposed

increments to Marine and Processes sector deferred to 2020

The foreign worker levy rate for 2019 will remain unchanged, as per the Budget of
2019.

Rates for the work permit levy in Singapore will depend a worker’s qualifications and
total number of Work Permit or S Pass holders currently in employ. Workers that fall
into the category of higher-skilled worker carry a lower levy.

S Pass levy rates for the services sector is set as S$330/month (at tier 1, i.e. <= 10%
of total workforce) and S$650/month (at tier 2, i.e. >10% and <= 15% of total
workforce). For all other sectors, tier 1 charges are the same while tier 2 charges will
be made when total workforce is > 10% and <= 20%.

Proposed levy increments for the Marine Shipyard and Process sectors have been
deferred to 2020, much to the relief of the sectors involved.

Levy Rate for Malaysian Work Permit exempt from MYE

Man-year Entitlement (MYE) is excluded when calculating the Levy Rate for
Malaysian Work Permit. Non-Malaysian workers withMYE-waiver costs more to
hire, with the levy for higher-skilled workers priced at S$600/month and basic-skilled
workers at S$950/month (S$19.73/day and S$31.24/day respectively).

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<Hire Malaysian Workers in Singapore>

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Table of foreign worker levy rate 2019
Sector/Pass Tier Dependency Levy Rates ($) (R1/R2)
Type Ratio Ceiling 1 Jul 1 Jul 1 Jul
(DRC) 2018 2019 2020
S-Pass Basic Tier <= 10% 330 330 TBA
Tier 2 10-20% 650 650 2020
Construction Basic Tier <= 87.5% 300/700 300/700 300/700
WPH MYE-Waiver 600/950 600/950 600/950
Services WPH Basic Tier <= 10% 300/450 350/450
Tier 2 10-25% 400/600 400/600
Tier 3 25-35% 600/800 600/800
Marine Basic Tier <= 77.8% 300/400 300/450
Shipyard WPH TBA
Process WPH Basic Tier <= 87.5% 300/450 300/450 2020
MYE-Waiver 600/750 600/750
Manufacturing Basic Tier <= 25% 250/370 230/370
WPH Tier 2 25-50% 350/470 350/470
Tier 3 50-60% 550/650 550/650

Only DRC of services sector to be cut by 5% by 1 Jan 2021. Image of Singapore Bistro
courtesy of Pixabay.

Introduction of Transitional Support Measures to help Firms weather Policy

Changes

To help firms absorb the changes in the upcoming foreign workforce policy,
Transitional Support Measures in the form of the Enterprise Development Grant
(EDG) will take effect by 1 January 2020.

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The EDG will comprise a holistic grant scheme that will provide SMEs up to 70%
government funding and 50% government funding for non-SMEs for the purpose of
improving their business, operational and international capabilities.

A statement by Mr Seah as provided to The Business Times, says, “Companies are

given more time to adjust. Moreover, there is a whole slew of policy measures to help
enhance their technologies, redesign jobs and processes, or hire more elderly
workers.”

In another message, Minister Heng Swee Keat stated in Parliament that the
government needed to “act decisively” to manage the manpower growth in the
services sectors and to encourage companies in Singapore to revamp work processes,
redesign jobs and reskill and upgrade workers.

Introduction of Hiring Support Programmes

The government will also introduce a new Professional Conversion Programmes this
year to encourage growth in the areas of prefabrication, embedded software and
blockchain.

The Professional Conversion Programme will primarily target professional managers,

executives and technicians looking to switch into sectors that are higher demand.

To encourage employers to hire retrenched or unemployed workers, the government

will also introduce the Career Support Programme that provides employers with a
short-term wage subsidy for hiring of any employee of this group.

Related Articles:
1) Singapore Foreign Employment Rises in 2018
2) 5 Tips on How to Find the Best Recruitment Agency in Singapore for
Foreigners.