• The S Pass sub-Dependency Ratio Ceiling for manufacturing will be cut from 20 per cent to 18 per cent in 2022 
• It will be further reduced to 15 per cent in 2023
• This tightening is in line with what is happening in other sectors
• Singaporeans will have to deepen skills and capabilities while the country moderates its reliance on foreign labour, DPM Heng said

SINGAPORE — Manufacturing businesses will have to reduce their dependence on foreign workers over the next two years, as the Government seeks to encourage the sector to enhance the skills of resident workers while moderating its reliance on foreign labour. 

Deputy Prime Minister Heng Swee Keat said this during his Budget speech on Tuesday (Feb 16), where he announced that the S Pass sub-Dependency Ratio Ceiling (sub-DRC) for manufacturing will be cut from 20 per cent to 18 per cent in 2022 and to 15 per cent in 2023. 

The S Pass sub-DRC is the proportion of S-Pass holders a firm can employ. S-Pass holders are mid-level, skilled foreign workers who earn at least S$2,500 a month.

Mr Heng noted that manufacturing is a “significant pillar of our economy” and the sector has seen 450,000 jobs created over the years. This is around 12 per cent of Singapore’s workforce, with median wages about 10 per cent higher than the economy-wide median. 

“To achieve our vision of being a global advanced manufacturing hub, firms must make it a priority to develop a strong highly skilled local core in their workforce." 

However, firms “cannot do without foreign workers, especially those with deep skills”, he added.

The changes to the foreign worker quotas in manufacturing is in line with the tightening already underway in other sectors, he said. At last year’s Budget, it was announced that the sub-DRC for the construction, process and marine shipyard sectors will be reduced from 18 per cent to 15 per cent in 2023. 

“This move has been carefully calibrated, so that firms have one year to adjust, before changes are being implemented,” Mr Heng said of the tightening of ratio for the manufacturing sector. 

“We will continue to review our S Pass framework, including the qualifying salary and levies, to maintain the complementarity (with the resident workforce).”

PULLED ON BOTH SIDES

Beyond the regulation of manpower in the manufacturing sector, Mr Heng said that some Singaporeans are concerned about the reliance on and competition from foreign manpower in the workforce as a whole. 

At the same time, many businesses and trade associations have said that it is difficult to hire Singapore workers and have asked the Government not to tighten foreign worker quotas further. 

“The way forward is neither to have few or no foreign workers nor to have a big inflow,” Mr Heng said.

“We have to accept what this little island can accommodate... To strike a balance, we must focus on enhancing the complementarity of local and foreign manpower and step up on industry transformation.”

In line with this, the Government will support the employment of Singaporeans, to deepen their capabilities and promote capability transfer. This will be done “while moderating our reliance on foreign labour where we must”, he added. 

The Wage Credit Scheme, which co-funds wage increases, will be extended by a year so that companies may retain or draw resident workers. 

“I urge employers to make use of this and other schemes to redesign jobs and upskill their local staff,” Mr Heng said. 

The Capability Transfer Programme, which supports foreign-to-domestic skills transfer, will be extended to September 2024. 

As of the end of last year, more than 140 companies and more than 970 Singapore residents have benefited or are expected to benefit from 40 projects under the programme. 

Mr Heng said that expatriates with the right expertise can complement Singaporeans and help build capabilities, especially in “new growth areas” where there may be a shortage of skills. 

“This will allow us to add vibrancy to the local market, better serve international and regional markets, and enhance Singapore’s attractiveness to global investors.”