Budget 2015: Increase for foreign worker levies held off
A foreign worker dormitory located at Mandai Estate. TODAY file photo
SINGAPORE — This year’s foreign worker levy increases for S Pass and Work Permit holders will be held off to next year, so that companies, especially SMEs, have more time to adapt to the new normal of a permanently tight labour market, said Finance Minister Tharman Shanmugaratnam.
In addition, the manufacturing and construction sectors will see further changes.
For manufacturing, levies for Work Permit holders will be kept at July 1, 2014 rates until 2017. Mr Tharman noted that the manufacturing sector has not seen any increase in the number of Work Permit holders over the past year, and that it was making good progress on productivity.
Construction companies, however, will have to pay higher levies for Basic Skilled (R2) workers. From July 1 next year, levies for these workers will be raised from S$550 to S$650. This will be raised again to S$700 in 2017.
For Higher Skilled (R1) workers, levies for Man-Year-Entitlement (MYE)-waiver will be lowered from S$750 to S$600 from July 1 this year. All other levy rates for the construction sector will remain at 2014 levels.
Noting that the progressive tightening of foreign worker policies since 2010 has shown success in reducing foreign workforce growth, Mr Tharman said the net inflow of foreign workers — excluding the construction sector and foreign domestic workers — has dropped from 60,000 in 2011 to 16,000 last year.
“The significant slowdown we have seen in the last year gives us space to adjust the pace of our tightening measures,” he said.
But he emphasised that the adjustment of pace of foreign worker measures did not mean the Government was changing its direction. “It remains crucial for Singapore that we restructure towards reducing our reliance on manpower, and find new and more innovative ways to do business,” he said.
Mr Tharman added that while Singapore has to stay the course in reducing its reliance on labour, especially unskilled foreign workers, the Government will continue to adjust its foreign worker policies according to the pace of inflows, quality of workers being employed, and the progress being made in raising productivity.
He assured businesses that the Government will continue to compensate them with more resources than the additional foreign worker levies it was collecting, through incentives and grants to help the businesses upgrade and innovate.
Adding that most of the support will be targetted as SMEs, the minister said that this year alone, the amount being flowed back to SMEs is expected to be more than one-and-a-half times the additional foreign worker levies that they will pay.
READ THE FULL BUDGET STATEMENT HERE
Other documents on Budget 2015 available on the Budget 2015 website.
