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Budget 2021: S Pass quota for manufacturing sector to be cut to 15% from 2023

Budget 2021: S Pass quota for manufacturing sector to be cut to 15% from 2023

File photo of a manufacturing facility in Singapore. (Photo: AFP/Roslan Rahman)

SINGAPORE: The foreign worker quota for S Pass holders in the manufacturing sector will be cut from 20 per cent to 15 per cent in phases over the next two years, announced Deputy Prime Minister Heng Swee Keat in his Budget speech on Tuesday (Feb 16).

The cuts to the S Pass sub-Dependency Ratio Ceilings (DRCs) – the proportion of S Pass holders a firm can employ – are in line with the tightening already under way in other sectors, such as services, construction, marine shipyard and process sectors, Mr Heng said.

The DRC is the maximum permitted ratio of foreign workers to the total workforce that a company is allowed to hire. S Pass workers refer to mid-level skilled foreigners who earn at least S$2,500 a month.

As it happened: DPM Heng Swee Keat's Budget 2021 speech

The cuts targeted at skilled foreign workers in the manufacturing sector will be done in two steps. The first, from 20 per cent to 18 per cent from Jan 1, 2022, and subsequently to 15 per cent from Jan 1, 2023.

Mr Heng said manufacturing is a significant pillar of the economy which hires about 450,000 workers, or about 12 per cent of the workforce. Median wages in the sector are also about 10 per cent higher than the economy-wide median.

Last month, the Government had announced a new vision to grow its manufacturing sector by 50 per cent over the next 10 years, and ensure the sector continues to contribute to about a fifth of economic output over the medium term. 

READ: Singapore aims to grow manufacturing sector by 50% over next 10 years

To achieve the vision of being a global advanced manufacturing hub, he said the local workforce will need to develop deep skills and the industry has to reduce reliance on foreign workers.

The Government will continue to review the S Pass framework, including the qualifying salary and levies, to maintain the complementarity of foreign workers with the local workforce, Mr Heng added.

READ: Budget 2021: S$5.4 billion boost to SGUnited to support hiring of 200,000 locals

Among other announcements, the Wage Credit Scheme will be extended for a year at a co-funding level of 15 per cent.

This is to provide further help to support wage increments for companies to retain or draw in locals, said Mr Heng, although he urged employers to also tap other schemes to redesign jobs and upskill their local staff.

The Capability Transfer Programme (CTP) will also be extended up to end-September 2024.

READ: Budget 2021: S$24 billion to transform businesses and workers over next three years

Mr Heng said there are sectors, especially those in new growth areas, where the country may be short of skills. Welcoming expatriates with the right expertise to complement Singaporeans and help build capabilities will add vibrancy to the local market, better serve international and regional markets, and enhance Singapore’s attractiveness to global investors.

The CTP is one of the many programmes that supports foreign-to-local skills transfer. As of end-2020, more than 140 firms and over 970 locals have benefited or are expected to benefit from 40 projects, said Mr Heng.

READ: Budget 2021: Jobs Support Scheme extended for worst-hit sectors as part of S$11 billion package

In his speech, the Finance Minister noted concerns from some Singaporeans about the country’s reliance on, and competition from, foreign manpower.

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 to not be tightened further.

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

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

Source: CNA/sk

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