SINGAPORE
EMPLOYMENT TREND NEWSLETTER

Budget 2010

In Pursuit Of Optimising S'pore to slow down on hiring foreign workers

SINGAPORE's Budget 2010 revealed that the country intends to raise Foreign Worker Levies to curb the hiring of foreign workers. This coming from the growing unease among locals over the influx of guest workers and immigrants in recent years.

Finance Minister Tharman Shanmugaratnam said that the government's increase in Foreign Worker Levies will be phased-in over the next three years.

For low-skilled foreign workers, the levy on their work permit will be raised by S$10 to S$30 per worker per month on July 1, 2010, and will average about S$100 over the three years.

For 'S-pass' holders, which refers to a category of skilled and semi-skilled workers, their levy will increase to S$100-S$120 in July from S$50. Presenting the 2010 fiscal year budget in parliament, Mr Shanmugaratnam explained that the increase is aimed at reducing Singapore's dependence on foreign workers.

"We should moderate the growth of the foreign workforce and avoid a continuous increase in its proportion of the total workforce," he said noting that foreign workers already comprise almost a third of the city-state's total workforce.

However, the dependency ratios, which is the number of foreigners a firm can employ for every local on its payroll and which varies by industry, will remain unchanged.

The government chose to raise levies paid by companies for every worker they hire instead of imposing strict quotas so that foreign workforce could fluctuate across the economic cycle, enabling employers who are doing well and need more foreign workers to continue to hire them rather than be constrained by fixed quotas.

Singapore's Minister Mentor and first Prime Minister Mr Lee Kuan Yew has warned against reducing the number of foreign workers too drastically, citing that it could affect the country's growth, property prices, employment and salaries, and could lead to a deflating economy. He urged Singaporeans not to forget the positive contributions that foreigners have made to the economy.