Last updated: 31 January 2012 | Source: Comprehensive Labour Force Survey, MOM
Latest figures published in: Report on Labour Force in Singapore
Notes Time Series Data Statistical Charts Source, Coverage & Definitions
1. Data are for mid-year.
2. Labour force participation rate is defined as the percentage of economically active persons to the population aged fifteen years & over.
3. Residents refer to Singapore Citizens and Permanent Residents.
4. n.a. = not available
5. Data for 2000 and 2005 are not available as the Comprehensive Labour Force Survey was not conducted in these years due to the conduct of the General Household Survey 2005 and the Census of Population 2000 by the Department of Statistics, Ministry of Trade and Industry. Please refer to the website athttp://www.singstat.gov.sg/pubn/pubn.html for findings from these sources.
6. To facilitate comparison with 2008 onwards, the 2007 data have been adjusted based on Singapore Department of Statistics' revised population estimates (released in February 2008) which exclude Singapore residents who have been away from Singapore for a continuous period of 12 months or longer. Adjusted data for 2007 are denoted by the symbol a.
Illegal workers and illegal employmentWhile there are strict penalties in place, foreigners have not been entirely deterred from enteringSingapore illegally and seeking employment in Singapore. Others may enter legally but overstaybeyond the permitted duration of their work permit/entry pass. The numbers of illegalimmigrants and overstayers arrested in recent years are presented in section 6b. Still others mayenter the country on social visit passes which do not allow them to work but who neverthelesswent on to seek and find employment without obtaining work permits. This is a contravention ofthe Employment of Foreign Workers Act.The illegal deployment of foreign workers in jobs or sectors not stipulated in their work permitsor with a different employer also serves as another problematic area that has proved a challengeto the Singapore authorities. Within the first nine months of 2006, the number of foreign workersarrested for illegal employment in the food and beverage sector (food servers, cooks, stallassistants and cleaners) was 13.6% higher than the number of foreign workers arrested in 2005.Previous operations conducted by the Ministry of Manpower have also uncovered foreignworkers working illegally as conservancy cleaners and general workers. According to 2004
statistics released by the Ministry of Manpower, 2950 foreign workers were arrested for illegalemployment and 409 employers were prosecuted under the EFWA.
Labour AgenciesLabour and recruitment agencies often take on the role of shepherding newly-arrived foreignworkers through the entire process of meeting and greeting them at arrival and seeing themthrough the necessary medical and other required tests before handing them over to theiremployers. As mentioned, employment agencies are required to look after the welfare of theforeign workers while they are in Singapore and mediate between workers and employers in caseof dispute. However, instances have been found where agencies have housed foreign workers inunacceptable, overcrowded accommodation while awaiting the relevant tests and handing over toemployers. In one instance, for example, the domestic workers also complained about the poorquality of food provided.
Upkeep, Maintenance and Well-being of Foreign WorkersAs mentioned earlier, the onus is on employers to provide for the foreign workers under theiremploy. However the provisions may vary in levels and quality.Accommodations provided range from well-ventilated dormitories to tiny illegal sheds. As ofJanuary 2007, it is unclear exactly how many illegal dormitories housing work permit holdersexist in Singapore. More modern dormitories boast of facilities such as security systems, cabletelevision, grocery stores, canteens as well as fitness parks. At the other end, some illegalpremises housing work permit holders may be made up of illegal sheds that cram as many as 25to 50 foreign workers into a small area, with only one toilet and bathroom for all to share. In theseillegal premises, space is extremely scarce and basic amenities such as taps are conspicuouslyabsent. Areas such as fire safety of these foreign workers are often neglected as well.In addition, the provision of sustenance for work permit holders also varies greatly in terms ofstandards and practices such as daily meal allowances or redeemable food vouchers. While someemployers may choose to pay a monthly fee to dormitory providers for the provision of bothaccommodation and food to their workers, the amount paid may be as low as $50 which is vastlyinsufficient to maintain the well-being of the foreign worker. Instances of unlicensed caterersproviding food for the foreign workers have also been increasing. Meals prepared in filthy andunhygienic conditions by illegal kitchens are also considerably cheaper.There have also been instances reported of employers who refuse to pay for medical treatments ofany kind, following the first requisite medical examination that the work permit applicant isrequired to pass. This is despite injuries that have been incurred during instances of work at theworksite thus failing to properly ensure the maintenance of their worker’s well-being.More importantly, despite a statutory requirement for employers to pay their foreign workerswithin the seven days from the last day of the salary period, cases of employers defrauding onsalaries have not been uncommon. Instances of late or non-payment of wages and employersfailing to pay the agreed amount of salaries, have made their way to newspapers in Singapore,thus highlighting the plight of foreign workers. Wages of these workers also remain largelystagnant, as suggestions for pay adjustments and contract bonuses are not legally delineated butare areas that have been raised for the employer’s consideration only. Employers are also notlegally bound to provide training for their workers other than the safety orientation course that ismandatory for workers in the construction sector.To meet the increasing demand for foreign labour in the Singapore workforce, the Singaporegovernment has stepped up efforts to cater to the needs of foreign labour. A particularly pertinentarea of concern for the Singapore authorities would be the regulation of low-wage foreignworkers entering Singapore under the work permit scheme. Plans to provide better and more selfcontainedaccommodation for work permit holders was recently unveiled in the 11th SingaporeParliamentary sessions in response to the rising number of work permit holders requiringadequate accommodation. Unlike employment pass holders who are eligible to own property inSingapore within certain stipulations, work permit holders are strictly prohibited from purchasingproperty locally. Furthermore, as of last November, the Housing Development Board (HDB) thatregulates public housing in Singapore has prohibited the rental of HDB flats to non-Malaysiawork permit holders. Consequently, the need to house the increasing numbers of work permitholders have prompted the Singapore government to release more potential sites in areas ofindustrial or warehouse development for the accommodation of work permit holders(“Government to release more sites for foreign workers dormitories”, Channel NewsAsia 13February 2007). While employers of foreign workers are bound by the Employment of ForeignWorkers Act to provide suitable accommodation for the Work Permit holders they employ, thecurrent practice is to leave such decisions to the employers themselves. This practice results in agreat variation of standards in the accommodation provided, especially in the construction sector.
Behaviour/Activities of Foreign WorkersAn issue that has also made its way into media reports is the crowding of certain public places onweekends (especially Sunday) when foreign workers gather to shop, meet up with friends and
fellow countrymen and enjoy some recreation. While some appreciate the business opportunitiesthat such foreign workers bring, others (including residents and business people) complain aboutrowdiness, drunkenness and unsanitary behaviour exhibited by these workers. Traffic congestionand accidents was another concern. In this regard, a special area has been designated in the LittleIndia area, for example, to cater to the needs of foreign workers. Patrolling has also been steppedup.Residents in areas such as public housing neighbourhoods that house foreign workers have alsocomplained about their behaviour. In this regard, foreign workers will no longer be allowed to behoused in public flats, in addition to the ban on housing such workers in private apartments andlanded residential properties already in place (see “Space Crunch”, Straits Times Interactive 15January 2007). More dormitory-style housing are on the cards as Singapore expects to increasethe number of foreign workers in the country in view of the projected growth in the constructionsector.On the issue of crime amongst the foreign labour, the Singapore Police Force do not consider thisto be excessive. According to the statistics released by the Singapore Police Force, foreignersconstituted a total of 14% of all arrests made between the months of January to December 2006.The number of foreigners arrested in 2006 also registered a decline of approximately 9% from theprevious year.As of 1st June 2005, biometric information of past immigrant offenders are kept in the BiometricDatabase for Immigration Clearance system in a bid to prevent the re-entry of ex-offenders intoSingapore through fingerprint matching procedures. In addition, the Immigration andCheckpoints Authority (ICA) is similarly assiduous in policing harbourers and employers whoattempt to bring in or hire foreign labour without a valid employment pass or work permit byimposing harsh punishments as deterrents. Despite ICA’s efforts, there was no decrease in thenumber of individuals arrested for the harbouring of illegal immigrants from 2005 to 2006. Thetotal number of employers arrested on 2006 for the employment of illegal foreign labour withouta valid work permit or employment pass saw an 18 per cent increase from 170 employers in 2005to 200 employers in 2006.Year Total Number of harbourersArrestedTotal Number of employersarrested2005 170 1702006 170 200
Source: Immigration & Checkpoints Authority News Release, February 1st 2007.
Work Permit - Before you applyFurther measures to moderate demand for Foreign Manpower
From 1 July 2012, the Dependency Ratio Ceilings (DRCs) in the Manufacturing and Services
sectors, as well as the S Pass sub-DRC in all sectors will be reduced. The changes are:
Reduction of S Pass sub-DRC for all sectors from 25% to 20%;
Reduction of Services DRC from 50% to 45%; and
Reduction of Manufacturing DRC from 65% to 60%.
More measures levied on constructions sector includes a further reduction of Man-Year
Entitlements (MYE) by 5% as well as a higher Foreign Worker Levy (FWL) of $650 for basic
skilled Work Permit holders in the MYE-waiver category from 1 Jan 2013.
For more information, please refer to our press release and FAQs.
Changes to Work Permit In-Principle Approval (IPA) letters
From June 2011, the Work Permit In-Principle Approval (IPA) letters for foreign workers (non-
domestic) will carry new features. There will be separate letters for workers and employers and
the letters will also be in the workers’ native language. This is part of our on-going efforts to make
our communications to employers and their foreign workers clearer and more transparent.
For a preview of the upcoming changes, please download the Employer’s Kit. More details will
be released later
Who should apply for a Work PermitThe Work Permit (WP) is for foreigners who:
Want to work in Singapore; and
Are from an approved source country/territory (depending on the sector which the worker is going to be employed in).
A prospective employer must first apply to the Controller of Work Passes for a WP before employing a Foreign Worker. Prior to that, business employers who have never applied for WP or S Passes before are required to declare their business activity.
There are rules and regulations which WP holders and employers have to follow. You can read these rules under the Conditions of Work Permits.
Malaysian workers
An employer who wishes to employ a Malaysian who already holds a valid WP in Singapore must apply for a separate WP:
Upon approval, the new employer will be issued an In-Principle Approval (IPA) letter stating when the new WP should be collected; and
The existing employer must cancel the worker's existing WP on or before the scheduled date of collection.
Workers from North Asian Sources/Non-Traditional Source/People's Republic of China
Non-Malaysian WP holders generally fall into one of these three source country/territory groupings:
1. North Asian Sources (NAS) – Hong Kong, Macau, South Korea and Taiwan
2. Non-Traditional Sources (NTS) – India, Sri Lanka, Thailand, Bangladesh, The Republic of the Union of Myanmar and Philippines
3. People's Republic of China (PRC)
Foreign Workers from NAS/NTS/PRC cannot be in Singapore when their WP applications are being submitted.
Employers can only bring these workers in after:
Obtaining the In-Principle Approval; and
Furnishing a security bond of $5,000 per worker.
Security deposits can be made in the form of a Banker's Guarantee or Insurance Guarantee payable to the Controller of Work Passes.
What is the age criteria to apply for a Work PermitUnder the Employment Act, the minimum age for an employee is set at 16 years old. This condition is applicable to both local and Foreign Workers. For the purpose of Work Permit application, Malaysians must be below 58 years old while non-Malaysians must be below 50 years old at the time of the application.
Employer requirementsWhen you employ a Foreign Worker in Singapore, it is your responsibility to:
Pay the Foreign Worker levy;
Arrange for the Foreign Worker's medical examinations as required by the Controller of Work Passes;
Pay the medical care and hospitalisation expenses;
- Employers of Foreign Workers are required to purchase and maintain medical insurance for their workers.
- For medical insurance policies taken up or renewed on/or after 1 January 2010, the insurance coverage must be at least $15,000 per year for each worker's inpatient care and day surgery during his/her stay in Singapore.
Satisfy the basic terms and conditions of employment as stipulated in the Employment Act;
Ensure that the Foreign Worker does not engage in any form of:
- Employment other than that stated in the WP; or
- Freelance arrangement or self-employment.
Resolve all employment-related disputes with the Foreign Worker amicably;
Provide Work Injury Compensation Insurance to the Foreign Worker as required;
Send the Foreign Worker for the Safety Orientation Course (construction industry only);
Provide upkeep, maintenance and eventual repatriation of the Foreign Worker;
Ensuring the provision of acceptable housing and updating of Foreign Workers addresses within five days of commencement of employment and subsequent changes in their addresses.
If the Foreign Worker is not a Malaysian, you are also responsible for:
Furnishing up a $5,000 security bond in the form of an insurance/banker's guarantee prior to his/her arrival in Singapore, failing which entry into Singapore will not be allowed.
As the security bond is signed between the employer and the Government, the Foreign Worker is not required to pay the security deposit.
The Security Bond Form Employment of Foreign Manpower Act (Chapter 91A) must be signed by the Partner/Sole Proprietor. For Private Limited Companies, it must be signed by a member on the Board of Directors/General Manager. The signatory's name must appear in the ACRA printout. If signed by any other persons than the above, an authorisation letter from a member on the Board of Directors will be required.
In addition, you should ensure that the Foreign Worker's welfare and interests are well looked after.
These include non-statutory requirements such as:
Proper orientation
Providing for the Foreign Worker's social and recreational needs
Rapid Growth in Singapore's Immigrant Population Brings Policy Challenges
By Brenda S.A. Yeoh and Weiqiang LinNational University of Singapore
April 2012
The history and fortunes of Singapore, an island nation between Malaysia and Indonesia, have always been closely intertwined with migration. As a British trading colony established in 1819, most of the city's population growth until the World War II was due to immigration. Supported by a fledging colonial economy, Singapore drew in large numbers of laborers from China, India, and the Malay Archipelago. Consequently, its population quickly grew from a few hundred to half a million by the 1931 census.
Immigration temporarily ceased during the Japanese occupation of 1942 to 1945,and Singapore's road to self-governance in the 1950s and 1960s saw the passing of new ordinances that limited immigration to only those who could contribute to its socioeconomic development. Stricter citizenship and immigration laws were imposed following Singapore's independence from Malaysia in 1965, leading to the dwindling of the city-state's nonresident population (i.e., nonpermanent noncitizen residents) to 2.9 percent of the total population.
It was not until the 1980s, when Singapore became more industrialized, that the question of migration returned. The state's nonresident population started increasing again, beginning a trend that continues to this day. In the last decade in particular, large infusions of new immigrants — and correspondingly new cultures — have begun to chisel away at the nationalist foundations the country had earlier laid. Coupled with concurrent waves of emigration among Singaporeans, the city seems to be returning to its former role as a transit point of the world.
Immigration to Singapore
The population of Singapore can be divided into two categories of people according to the permanency of their stay: Citizens (including naturalized citizens) and permanent residents are referred to as “residents,” while immigrants who are in Singapore temporarily (such as students and certain workers) are considered “nonresidents.” Permanent residents (PRs), while typically immigrants as well, have been granted the right to reside permanently in Singapore and are entitled to most of the rights and duties of citizens, including eligibility for government-sponsored housing and mandatory military service for young adult males, though not the right to vote in general elections.
The nonresident population increased at an unprecedented pace in the first decade of the 21st century, according to the 2010 Singapore census. During this period, it accounted for 25.7 percent of the total population, up from 18.7 percent in the previous decade (Table 1). As of 2010, the nonresident population stood at 1,305,011 out of a total population of 5,076,732.
A kiosk in Little India, a popular ethnoburb in multicultural Singapore.
Table 1: Changing Proportion of Citizens to Foreign Nonresidents in Singapore, 1947-2010
In 2008, annualized growth of the nonresident population peaked at some 19.0 percent, while that of the resident population steadied at just 1.7 percent. Population growth rates for both nonresidents and residents, however, have begun to ease since the 2008-09 Great Recession, with 4.1 percent growth among the former and 1.0 percent among the latter in 2010.
According to the 2010 census, about 14.3 percent of the 3,771,721 residents of Singapore are PRs. Between 2005 and 2009, the PR population grew an average of 8.4 percent per year — much faster than the comparatively modest 0.9 percent average growth observed for Singapore citizens. This trend seemed to come to a rather abrupt finish in 2010, however, when the annualized growth of PRs fell to 1.5 percent while that of Singapore citizens held steady at 0.9 percent.
Despite the increasing share of PRs among the resident population, which itself rose from 8.8 percent of the total population in 2000 to 14.3 percent in 2010, the ethnic composition of Singapore's residents has remained relatively stable since 1990. Albeit, the percentage of Chinese fell below 75 percent of the total resident population for the first time ever in 2010, while the share of Indians rose from 7.9 percent to 9.2 percent. These particular ethnic composition shifts are largely due to widening discrepancies between citizens' and PRs' ethnic profiles (Table 2).
Table 2: Resident Population by Ethnic Group and Status, 2010
Total Chinese Malays Indians Others
3,771,721
2,793,980
74.1%
503,868
13.4%
348,119
9.2%
125,754
3.3%
Singapore citizens
3,230,719
2,461,852
76.2%
487,758
15.1%
237,473
7.3%
43,636
1.4%
(85.7%)
Permanent residents
541,002
332,128
61.4%
16,110
3.0%
110,646
20.4%
82,118
15.2%
(14.3%)
Source: Department of Statistics, 2011
In terms of the overall migrant stock, the proportion of Singapore's population born outside of the country increased from 18.1 percent in 2000 to 22.8 percent in 2010. The majority of immigrants were born in Malaysia (386,000); China, Hong Kong, and Macau (175,200); South Asia (123,500); Indonesia (54,400); and other Asian countries (90,100).
The increasing share of the foreign born among Singapore's population is a direct consequence of policies to attract and rely on foreign manpower at both the high and low ends of the labor spectrum to overcome the limitations of local human capital. Indeed, the foreign born constituted approximately 34.7 percent of Singapore's labor force in 2010, up significantly from 28.1 percent in 2000. (Table 3)
Table 3: Foreign Workers in Singapore, 1970-2010
Year Total labor force No. of foreign workers Percent of total labor force
Source: Compiled from Rahman, 1999:7 (for 1970 and 1980), Singapore Department of Statistics, 2001:43 (for 1990) and Singapore Department of Statistics, 2011:48 (for 2000 and 2010).
The most rapid (absolute) increase in the foreign-born proportion of the labor force occurred in the 2000s when, following decades of healthy growth, Singapore's nonresident workforce increased 76.8 percent from 615,700 in 2000 to nearly 1.09 million in 2010. (Figure 1)
About 870,000 of these new arrivals are low-skilled workers primarily in the construction, domestic labor, services, manufacturing, and marine industries. Since 2008, some foreign born have also been admitted as performers for work in bars, discotheques, lounges, night clubs, hotels, and restaurants. The remaining 240,000 are skilled and generally better-educated S-pass or employment pass holders, along with a small number of entrepreneurs. The size of this group has also increased rapidly due to intensive recruitment and liberalized immigration eligibility criteria.
Figure 1: Singapore's Total Resident and Nonresident Workforce, 1980-2010
A third immigration flow of increasing importance is that of international students. In 2010, 91,500 nonresidents came to study in Singapore on foreign-born student passes, comprising 13.1 percent of all students in the country. While this represents a slight decrease in enrollment from 96,900 in 2008, the government of Singapore has made the recruitment of foreign students a priority since 1997 (see section on Recruitment of Foreign Students, below).
With respect to citizenship, eligibility for the foreign born is limited to those who are at least 21 years of age and who have been PRs for at least two to six years immediately prior to the date of application. According to Singapore's Immigration and Checkpoints Authority (ICA), citizenship applicants must also be "of good character," intend to reside permanently in Singapore, and be able to support themselves and their dependents financially.
According to media reports, 20,153 immigrants became citizens in 2008, continuing an upward trend from 17,334 in 2007; 13,200 in 2006; 12,900 in 2005; and 7,600 in 2004. In 2009 however, the number of new citizens fell slightly to 19,928. This slump was also mirrored in the annual uptake of permanent residency, which more than doubled from 36,900 in 2004 to 79,167 in 2008 but suffered a decrease to 59,460 in 2009. Sharper declines were recorded for both
citizenship and permanent residency in 2010, ahead of the May 2011 general elections (Figure 2).
Figure 2: New Citizens and Permanent Residents in Singapore, 2002-2010
Low-Skilled Foreign Workers
Singaporeans are reluctant to take up low-skill jobs that pay low wages, so foreign-born workers often fill these positions. To guard against excessive permanent migration of those with less skills, however, government policy since the 1970s has ensured that unskilled and low-skilled migrants remain a transient workforce, subject to repatriation during periods of economic downturn.
Low-skilled foreign-born workers are managed through a series of measures, including the work-permit system, the dependency ceiling (which regulates the proportion of foreign to local workers), and the foreign-worker levy. These measures are expected to be tightened between July 2012 and July 2013 (see Table 4). Workers are only allowed to work for the employer and in the occupation indicated in their work permit, though a sponsored transfer of employment is permissible and subject to work pass validity. The termination of employment of a foreign-born worker results in the immediate termination of the work permit, in which case the immigrant must leave Singapore within seven days.
Work-permit holders are also subject to a regular medical examination that includes a general physical checkup, a chest x-ray, and a test for HIV/AIDS. They may not marry Singaporeans or PRs without the approval of the controller of work permits, and failure to get approval may result in repatriation. Female work-permit holders (typically domestic workers) who, through the compulsory medical screening process, are found to be pregnant are also subject to repatriation without exception.
On top of these controls, employers of work-permit holders are also required to post a S$5,000 (US$3,820) security bond for each (non-Malaysian) foreign-born worker. All employers of foreign-born domestic workers must also take out medical insurance (S$15,000, or US$11,450) and personal accident insurance (S$40,000, or US$30,535) coverage for each such worker, since employees in this sector are not entitled to workman's compensation.
Table 4: Eligibility Schemes and Conditions for Work-Permit, S-Pass, and Employment-Pass Holders
Highly Skilled Foreign Labor
The other burgeoning sector of foreign labor — skilled workers — is usually referred to as "foreign talent" in both government and public discourse. Currently, skilled workers and professionals account for 22.0 percent (about 240,000) of Singapore's total nonresident workforce, eclipsing the 14.6 percent recorded for 2006.
Traditionally, most skilled professionals have come from the United States, Britain, France, and Australia, as well as Japan and South Korea. Due to policies instituted in the 1990s to recruit the highly skilled in nontraditional source countries, however, the majority of skilled workers (apart from Malaysians) are now from China and India.
Given Singapore's aspirations to become a major player in the globalized world, the nation's main economic strategy is based on being home to a highly skilled workforce. In addition to investing heavily in information technology and human capital to meet global competition, the government has focused on developing Singapore into the "talent capital" of the global economy.
To reach this goal, Singapore has liberalized some of its immigration policies (while tightening others related to low-skilled immigration) and made it easier for skilled migrants to gain permanent residency and citizenship. Various state programs have been launched to facilitate the inflow of talent to Singapore, including company grant schemes to ease the costs of employing skilled foreigners, a housing scheme to aid in the short-term accommodation needs of skilled foreign-born, various recruitment missions abroad, and regular networking and information sessions held in major cities worldwide. Recent urban development policies aimed at branding Singapore as a culturally vibrant "Renaissance City" or "A Great Place to Live, Work, and Play!" are also partly driven by this goal.
Unlike lower-skilled, lower-paid foreign workers, highly skilled workers hold P, Q, or S employment passes (i.e., not work permits) that are much less restrictive and confer greater benefits (see Table 4). For example, dependents who accompany many employment pass holders can also seek employment at all work levels by obtaining a letter of consent (dependents of S pass-holders must apply for a separate work pass). Additionally, P, Q, and S employment pass holders may apply to become PRs or citizens — a privilege not accorded to the lower-skilled with work permits.
To introduce more flexibility, a new subcategory of visas was introduced in 2007. The Personalized Employment Pass (PEP) is open to all current employment pass holders who have worked in Singapore for at least two to five years and who draw a minimum annual salary of S$34,000 (US$27,032). Overseas professionals who wish to immigrate to Singapore and whose last drawn monthly salary overseas was at least S$8,000 (US$6,107) are also eligible. PEP holders can take on employment in any sector of the economy, may be accompanied by their family members, and are permitted to stay in Singapore for up to six months if unemployed between jobs.
Around the time of the May 2011 general elections, the government of Singapore was facing widespread public disapproval of its liberal immigration policies for the highly skilled. This, coupled with difficult global economic conditions since the Great Recession, brought about a slight reversal of Singapore's policy stance towards skilled labor in the second half of 2011.
In two rounds of policy tightening with regards to employment pass and S-pass eligibility criteria between July 2011 and January 2012, it was decided that skilled foreigners must command 11 percent to 20 percent higher salaries before being granted the right to work in Singapore. And in December 2011, a provision allowing certain foreign-born professionals (those who possess or had possessed selected university degrees and/or skilled migrant visas for other countries) to apply for an employment pass eligibility certificate so that they could remain Singapore for up to a year to look for employment was also scrapped. As a result, foreign-born students in Singapore now have three months after graduation to land a job
before having to return to their countries of origin. Additional measures to tighten the demand for S-pass workers are also expected to be phased in between July 2012 and July 2013.
Recruitment of Foreign Students
The global demand for international higher education has been projected to rise from around 2.2 million students in 2005 to 3.7 million by 2025, and the government of Singapore has taken steps to increase the number of foreign students who come to the city-state for study.
Singapore has long attracted students from Malaysia and Indonesia, but has been making specific efforts to develop the country into an international education hub for primary- through university-level students since 1997. Singapore is focusing on its strengths — including its English-speaking environment, high educational standards, and reputation for public order and safety — in the recruitment of foreign-born students from China, India, Southeast Asia, and other areas. Specifically, it has used the tagline "Singapore: The Global Schoolhouse," and the message that Singapore combines the best of Asian and Western education systems.
A government economic review panel recommended a target of 150,000 foreign-born students by 2012 — more than double the 2005 figure of 66,000 — estimating that this would create 22,000 jobs and raise the education sector's contribution to the gross domestic product from the current 1.9 percent (S$3 billion or US$2.29 billion) to somewhere between 3 and 5 percent.
As part of this effort, state agencies have designated an "arts and learning hub" in the central area of Singapore city; encouraged the creation of private schools; wooed reputable universities, like INSEAD and New York University's Tisch School of Arts, to set up branch campuses or programs in partnership with local universities; and set up the Singapore Education Services Center as a one-stop information and service center (equivalent to the British Council) for foreigners wishing to study in Singapore.
Emigration from Singapore
In the same way that immigration has gathered pace, more and more Singaporeans are packing up their bags and moving abroad. Temporary emigration or circular migration — for education, training, business, and work experience — has not only encouraged since the 1990s as a way through which the city-state can become more globally oriented and competitive, but is also associated with prestige and elitism.
One of the reasons why an overseas experience has been so valued is the pervasive way in which mobility has been celebrated in Singapore. A large proportion of civil servants and political leaders received their education in top universities abroad, and globalization has reinforced the view that mobile citizens, as bridge-builders, are indispensable to Singapore's economic development. Closely related, there is also the perception that foreign-born expatriates in Singapore are more valuable than local workers because of their exposure to foreign markets, thus allowing them to command higher salaries.
As of June 2011, an estimated 192,300 Singaporeans live overseas. The top destinations for Singaporean expatriates include Australia (50,000), Great Britain (40,000), the United States (20,000), and China (20,000). Many Singaporeans migrate as highly skilled workers and are employed in specialist sectors such as banking, information technology, medicine, engineering, and science and technology. Additionally, a generous proportion of them are students pursuing their first and/or postgraduate degrees. Some Singaporean students abroad have been sponsored by government scholarships and are obligated to return upon finishing their studies.
In the last decade, however, the trend for Singaporeans to emigrate permanently without necessarily contributing or returning to Singapore emerged and has government officials worried. With an average of about 1,200 highly educated Singaporeans (including 300 naturalized citizens) giving up their citizenship each year in favor of others, it is feared that, due to a lack of dual citizenship provisions, the country could be facing a brain-drain crisis rather than reaping the benefits of circular migration. In fact, it was reported in 2010 that about 1,000 Singaporeans a month were applying for a “Certificate of No Criminal Conviction” — a prerequisite to getting permanent residence overseas. In some social surveys among Singaporean youth, more than half of those surveyed would leave the country to build their careers if given the chance.
In response to this problem, the Singapore government has implemented a number of measures to reconnect with overseas Singaporeans in the hope that some will return in due course. Initiatives include linking up overseas Singaporeans with prospective employers in Singapore; updating them on the latest national developments; and setting up recreational clubs and social events (e.g., Singapore Day) for them in foreign cities. These tactics aim to keep overseas Singaporeans tied to Singapore, whether practically or emotionally.
Ongoing Issues, Challenges, and Social Change
Having greatly liberalized its borders in the past few years, it is not surprising that Singapore's migration reality has become more complex. The influx of large numbers of new immigrants into the city-state seems set to continue, even as emigration accelerates and fertility rates fall to a new low (1.15 children per female in 2010, down from 1.60 in 2000). In this context, attracting skilled foreigners to live, work, and settle — while keeping low-skilled workers under thumb — will likely remain a priority for the foreseeable future.
With the prospect that increased immigration could bring new challenges to Singapore socially, the government is working hard to maintain a state of harmony within what is already a multicultural nation. In several high-profile ministerial speeches in 2011, including Prime Minister Lee Hsien Loong's National Day rally speech as well as former-Minister Mentor Lee Kuan Yew's recent reminders about the nation's reliance on immigrants for growth, Singaporeans were encouraged to take a long-term view; continue to welcome talent; and, at least for a while, to “accept the discomfort” of having more foreigners around. While not expected to relinquish their cultures and languages, immigrants have been urged to participate in local events so that they can learn more about the traditions of their adoptive communities.
In 2009, Singapore's National Integration Council was established to promote interaction and national solidarity between locals and newcomers. Notably, a S$10-million (US$7.95-million) Community Integration Fund was created to sponsor activities that foster bonds between Singaporeans and immigrants. Additionally, 2011 saw the launch of the Singapore Citizenship Journey, an enhanced orientation program for new citizens comprised of online elements, field trips to heritage sites, and community sharing. The People's Association, which appoints “Integration and Naturalization Champions,” further engages new citizens through home visits, grassroots activities, and community work.
Social integration is, however, far from smooth on the ground. To some locals, newcomers — particularly the ubiquitous Mainland Chinese — are commonly seen as uncouth and prone to objectionable behaviors like littering, eating on public transit, and talking loudly on the phone. Similarly, South Asian construction workers and Filipino domestic workers have also been singled out as targets of public backlash. With criminal activity rising, including several high-profile murders in mid-2011, foreigners have also been blamed for the deterioration of public safety in Singapore.
Immigrants have responded with their own set of rejoinders. A spate of online disputes in 2011 involving Mainland Chinese immigrants ridiculing Singaporeans as “ungracious,” “disgusting,” and “inferior” reveals the extent of social discord despite the state's efforts toward immigrant integration. In August 2011, an immigrant family from China went so far as to lodge a complaint against their Singaporean-Indian neighbors for the smell of curry emanating from their cooking. In response, a Facebook page urging Singaporeans to prepare curry on a designated Sunday drew over 57,600 supporters. Ironically, Singaporeans of different ethnicities have become more united in this time of discord with immigrants.
Another point of contention relates to the belief that immigrants compete with Singaporeans for jobs. While the state insists that only jobs unfilled by citizens are assumed by foreigners, the government is still frequently criticized for not curtailing the uptake of managerial and professional positions by non-Singaporeans. Suspicions that the labor market is giving preferential treatment to the foreign born — described as “cheaper” and “harder-driving and harder-striving” than Singaporeans — are not helped by certain official statements. In particular, unemployment figures are routinely published as an aggregate comprising citizens and PRs, which obfuscates the actual unemployment rate among Singaporeans.
Paradoxically, a more tolerant side of Singapore emerges when it comes to the rights of unskilled and low-skilled foreign workers. Civil-society action has sought to address the adverse working conditions of foreign-born domestic workers — about 200,000 in Singapore today, mostly women and mainly from the Philippines, Indonesia, and Sri Lanka — since the early 2000s. Many have benefited from the social and advocacy support offered by nongovernmental organizations like Humanitarian Organization for Migration Economics and Transient Workers Count Too. Not only have these groups raised public awareness about the plight of foreign domestic workers, state agencies are now more inclined to attend to cases of abuse.
Similar help has also been extended to the other 670,000 work-permit holders. Some issues being addressed include workplace safety, wage and foreign-levy policy, accommodation standards, and the regulation of unsafe truck transport for migrant workers.
While their efforts are comprehensive in scope, the success of civil society in Singapore remains tied to the will of a strong state. Foreign-born domestic workers, for instance, have long been deprived of regular days off as part of their employment. This particular aspect of domestic work will change beginning January 2013, when a new law mandating days off will take effect. But such extended, hard-fought battles highlight the difficulty that advocacy
groups face in lobbying within a depoliticized space. They also hint at how citizens' distrust towards immigrants can further rigidify officially sanctioned surveillance curbs on foreign workers.
On the policy front, the question of increasing numbers of Singaporeans taking flight and the corresponding need to recognize dual citizenship remains an outstanding issue. Slippages between immigration policy goals and reality exert another constant strain. The various categories of work permits, as well as alternative passes that allow foreigners to enter as dependents, job seekers, entertainers, and private-school students before switching to worker status, suggest that Singapore's immigration policies go beyond mere talent-scouting or the filling in of unpopular job sectors, as often touted by officials.
In contrast to this openness, the emerging trend of working-class men who are disadvantaged in the local marriage market turning to foreign brides from nearby countries faces greater institutional hurdles. While the state has been anxious to stop the decline of marriage and fertility, marriage migrants from less-developed countries are not automatically granted residency or citizenship papers and may have to confront a long and uncertain pathway to citizenship. For couples with at least one Singaporean child however, the foreign spouse may be eligible to apply for a three-year Long Term Visit Pass-Plus, a new immigrant pass that will be available beginning April 2012. These policies reflect the clinical approach that Singapore adopts, whereby migration policies are frequently made based on particular economic criteria and rationale, rather than on strictly humanitarian or family-reunification grounds.
In sum, as Singapore comes of age in its development, new opportunities and problems have once again opened up the former colonial city to mobilities. While Singapore has long depended on external resources to satisfy its needs — for its workforce, jobs, education, talent, and even marriage — the country's goal to augment its population today presents much more complex risks, uncertainties, and challenges, often exacerbated by inconsistent policy outcomes. Indeed, the streams flowing through the highly globalized city have become decidedly more turbulent in recent years. With wisdom, perhaps the nation's political leaders can weather the storm that is now brewing.
What about Singapore?Unlike Japan, Singapore is unabashed about its aggressive labour import policy for low skilled migrants. In fact, the Singapore government takes great pains to justify its need for foreign workers through an ideology that emphasises pragmatism, economic growth and competitiveness. By narrowly defining migrant workers as highly-skilled workers, in Japan, low-skilled migrant workers are not recognized as workers and have therefore been excluded from essential protections in the workplace. Singapore’s labour policy on the other hand, emphasises equal treatment for both local and foreign workers.The Employment Act, for example applies equally to both locals and foreigners. Yet, it is still not uncommon to hear of foreign workers being exploited despite this policy of equal treatment. Low wages, coupled with 12 hour work days, seven days a week is common. Some are even asked to sign contracts with no OT pay, annual or medical leave. How often have we heard employers complaining that local workers are choosy, fussy and unwilling to work as hard as foreign workers? The solution it seems is to import cheap migrant labour. Helping businesses cut cost with cheap labour is good for the nation since the prosperity of the nation depends on it, or so the logic goes. Somehow there seems to be a tacit assumption that it is ok to oppress and exploit foreign workers since ultimately, everyone will benefit. Such a policy does no one any favours at all, including local workers since they are being priced out of the market by easily exploited foreign workers.These abuses continue to happen because we are sympathetic to the concerns of businesses here which depend on the exploitation of migrant labour for the prosperity of the nation as a whole. We turn a blind eye to migrant workers here being wrongfully confined, and allowing the operations of so-called security companies to forcefully repatriate workers because the State also views them as threats to our community.In Japan, if all migrants who are engaged in work – regardless of skill level and legal status – were to be officially recognized as bona fide workers, Japan’s powerful labor laws could do much to eliminate maltreatment and exploitation in the workplace. However, doing so would present the burden of additional compliance with
domestic and international laws, making it more difficult for the government to manage the inflow and desired return of migrant workers and their families. Therefore, in Japan, one of the fundamental challenges of securing migrant worker rights involves the need to pressure the government into officially recognizing all migrant workers as bona fide workers.In contrast, in Singapore, the government openly admits and encourages the recruitment of migrant workers of all skill levels. This has created resentment and led to calls for reforms by some to provide minimum wage protection for local workers and not to foreign workers. Pitting one group of exploited workers against another will only polarise the issue into them vs us. The conditions of local workers will not improve when we frame the issue in this way. However, until we can secure better protection for local workers, what chance do our foreign workers with no voting rights have?
Eight Reasons Why Foreign Workers Are Preferred Over Local OnesNumber of View: 14161
This article first appeared here on 21 May 2010.
When the Singapore government decided to ease regulations on the hiring of foreign workers so that employers can fill up those nagging job vacancies, there was much cheer and giety.
It was a roaring Singapore before the financial crisis hit in 2007 and everyone felt that this was the right thing to do.
There was also full employment and no one paid the matter any attention as all along foreign workers have worked alongside us all this while.
No one also really knows how many foreigner imports will be let in until they saw the congested trains and swarmed shopping malls. Singapore is not the same again after 2008…To the the employers, it is almost like receiving a big ang pow from the government without having to do much. Some I know went through their headcount immediately to see who they can replace with S-Pass work permit foreigners.
Those locals workers that earn alot through their years of service and experience were targetted for replacement. Unfortunately, the floodgates were still open when the financial crisis hit us in 2007 with adverse repercussion. Many have been replaced by foreign workers when the financial crisis hit us in 2007. By then, lowering labor cost becomes a very real issue and having foreigners become almost a must-have agenda on every employers’ to-do list. If not, the business may just sink.
Most businesses can only have a foreign worker quota of 25% of the company’s total workforce. However, companies in the marine or construction sectors can have a higher quota due to their industry type as Singaporeans tend to shy away from such menial work.
However, we have heard by now how the local companies work their way around the foreign worker quota system by artificially implanting local workers in their company. They are merely phantom workers, even paid CPF monies in their account and are used as a headcount so that more foreign workers can be employed. Thus, in some restaurants, it is not surprisng to see many foreigners working with no local workers in sight.
By now, you would have hear of someone being replace by a foreign worker. It could even be yourself reading this article right now. The after effect of globilisation? Don’t count on it…
Let us look at the eight reason why our local bosses will always hire foreign imports over our own locally-bred PMETs:
1. Cost
To the employers, cost is the number one factor when they run a business. and this could not be disputed. So when the government sets up a sytem whereby the boss can hire cheaper foreign imports base on a quota system, you can understand why he will grab it with both hands. Many are counting how many foreign workers they can bring in base on the type of business that they are in and the number of current local workers under their payroll.
S-Pass work permit holders only requires a base salary of $1800 plus levy and no CPF. The levy fee varies with specific industry and average around $200 per month payable to our government. It is not surprising to note that the S-Pass work permit visa fee is a huge cash cow for the government during these few years. Several hundreds of millions of dollars in visa fees must have been paid to the government by now.
Most S-Pass work permit visa, more importantly, also comes with the promise that the employers will help them get their coveted permanent resident visa. To third world countries’ citizens like India and China, Singapore is a dream country to move out to and gain a steady foothold on. It will be foolish if the person does not grab the golden opportunity even though the offer salary is only $1800.
You can also imagine how much a company can save if he can replace just five local staff with foreigners who earns a salary of $1800 each. Most local university graduates command a starting salary of at least $2500. The costing effect is just too much to ignore here.
During the recent recession, I heard of many companies replacing their local staff with foreigner ones. No job is spared and there is no mercy here. Now you can understand why the locals are not opening embracing our foreigner counterparts with open arms. I am actually amazed that there is no reported arts of violence against foreigners in our country yet. In Australia, foreigners are reportedly been attacked as they are deemed to steal away the locals’ jobs.
2. Better Worker
To the employer, Singaporean workers though articulate and smart, sometimes talk back too much. They tend to argue back especially if they have work long and gain a good standing with the rest of the staff.
The Singaporean worker also likes to job hop for the slightest reason. When they want a salary raise and could not get it soon, they will start to look around. When they are most needed, they may also file in their resignation letter the next day. Worse of all, they often don’t come cheap.
The foreign worker will not have such issues. They will just come in and simply work as if their life depends on it.
3. Foreign Connections
I actually heard from some bosses how they try to benefit from the foreign workers’ business connection back home. This company may be exploring overseas business ventures and will not mind having his office staffed with foreign workers of a few nationalities. Thus, foreign workers with solid working experience in their own countries are held in high regard here esspecially for companies who are starting to explore overseas ventures. It makes sense to have a Indian staff working in your office when you are trying to do business in either Calcutta or New Delhi.
4. Scams and schemes
One of the worst offspring of the whole foreign worker saga is the exploitation of work permit visas issued by our Ministry of Manpower (MOM). Any registered companies have access to a certain quota of worker permit holders. What we are witnessing is perhaps the largest human trafficking scam that we have seen in modern days. The most frustrating thing is that it is all supposed to be legalised and legitimate.
Construction companies with a higher foreigner worker quota were set up almost overnight with the main aim of fleecing foreigners to come and work here at very high premium agent fee (between $5000 to $8000). Many foreigners borrowed from loan sharks back home to accomplish their dream of coming here to make a pile to bring home with them. Due to the high exchange rate, what they earn here in a year can only be earned in ten years back home. Singapore lures even though the job is labour-intensive and sometimes dangerous. Many construction workers died building our infrastructures which we boasted.
Hundreds of millions of dollars changed hands when bogus construction companies with no job availability brought in thousands of workers and housed them in shanty squatters. Many worked less than a week in a month if they are lucky. The scheme made instant millionaires out of the shady business owners who are out to exploit the foreign workers right under the eyes of MOM.
I also heard of a restaurant owner who could issue S-Pass work permit to any foreigner who meets all the criterion issued by MOM. The problem is he will not pay out any salary for the first year though it is in the contract as he pays for the worker’s levy, board and lodging (normally four to a HDB room) and other administrative costs. I heard and confirmed with a few other business owners that this is the acceptable contractual terms for any foreigner on our coveted S-Pass work permit. Restaurants are the main culprits of this unethical practice as they come in by the thousands hungry for work and a better future.
Employment agents who bring in foreigner workers for employers also make a pile when they collect high incentives from both the workers and the employers’ side. This almost sidelined the local workers from the employment scene.
It is almost unbelievable that such errant employment practices could happen right under our government nose! It is only recently that the government has hauled up a few of such errant agents and employers for persecution under the law when hundreds are already flouting the law the past few years.
5. Companies with foreigners seem hip
Local small and medium companies staffed with local employees all along now can seize the opportunity to improve their work force by injecting some foreign manpower. Thinking that foreign means better, they target slackers or high earning PMETs and replace them with foreign workers.
In Singapore, previously, foreign workers either means manual workers such as domestic maids or construction workers or the high-end expats that earn tens of
thousands of dollars. There is hardly any in-between until the S-Pass work permit comes into the picture few years ago to meet the shortfall in workers here. That present almost instant competition for the average Singaporeans.
Unfortunately, I have heard of companies with foreigner imports regretting their new prizes as they fail to impress with their work performances and know-how. Cheap does not mean better it seems.
6. Foreigner – More Than Just A Worker
We all know by now that the huge influx of foreigner workers is a huge national plot by the government to artificially inflate the dwindling population of our country. The intended country’s target is 6.5 million population. One in three of our population eventually will be a foreigner.
Businesses from government linked companies (GLC) to small and medium companies (SME) have no choice but to compliant. I am sure that big companies have a certain foreigner quota to fill even at the expense of locals losing their jobs.
I knew of GLC not renewing contracts of local workers just to fill in their foreigner worker quota. High end workers are also not spared the foreigner chop. I knew of a architect with a master degree in architecture who has to go as her contract was not renewed. She has to hand over her job to a Indian archtect. She is now working in China and may not want to return to Singapore anytime soon. When our local citizens have to give up their jobs to their foreigner counterparts so that the population growth is seen to be on target, something is definitely wrong here.
Migration among the local population is also seen as the highest during this five-year period in view of the drive by our government to step up foreign imports. It is strange that the locals are leaving the richest nation in the region. It goes to show that economic prowess may not be everything.
The way the government bulldozed its way to boost up the population growth may result in serious repercussion in the future. Social crime is on the rise and many Singaporeans now prefer their children not to return home too late at night. They are also advised not to loiter in areas that contain foreign enclaves. Integration programmes may have come too late now.
7. Political Agenda
Of course, there is the rumour that the government wants to fill up our population with foreign-born citizens so that when elections ar here, they will pledge allegiance with the one that provides for them.
I find this reason somewhat difficult to believe.
All along, the government enjoys almost a clean sweep of the seats except for two. There is no reason for the government to desperately bring in hundreds of thousands of foreigners yearly so that they can win the next election. Moreover, the government could not arm twist their new citizens to vote for them even though they have provide them the citizenship rights. So this theory does not hold water for me.
It is not surprising that the foreigner imports are mostly from China and India. These two countries are known to be the super powers of the near future. They will dominant the world’s economy and Singapore wants to be on right terms with them now.
By importing workers from these two countries, we have formed a close allegiance with these two countries and hopefully there will be business ties in future. Already, I have heard of how Indian businesses flourishing here as a result of their ability to hire their own kind to work with them. If not, they will prefer not to set up shop here. Some nationalities just could not work along well with workers from other countries.
It is also seen as a bilateral advantage if our country can provide jobs to other countries’ citizens in this tough economic condition. It is for this reason that within Asean, Singapore is highly regarded. When their own country could not provide enough employment to their own citizens, in step Singapore with offers of hundreds of thousands of jobs. The only problem is that for every job given out to a foreigner, it is one loss for our local kind.
Conclusion
The government has promised to slow down the intake of foreign workers in the near future to appease a furious local population. However, the more than one million foreigners already in our midst has robbed the locals of much space and employment. Many are still jobless or under-employed. It may not take long before we witness incidents of violence against foreign workers who are seem as snatchers of what that are rightfully ours.
Written by: Gilbert Goh
10 Facts About Migrant Workers in Singapore
Often working quietly in the background, foreign workers form a significant part of our population and
are pivotal to Singapore's economic progress. Find out more about this community with these 10 fast
facts.*
1. More than 20 percent of Singapore's 4.48 million residents, or 3 in 10 working adults, are
foreigners, many from less developed Asian countries.
2. There are approximately 800,000 low-wage migrant workers in Singapore. They are
employed as domestic workers, shipyard workers, cleaners, factory workers and construction
workers.
3. The majority of these workers come from regional countries such as India, Bangladesh, Sri
Lanka, the Philippines, Thailand and China.
4. An estimated 1 in 6 households in Singapore employs a foreign domestic worker, most of
them from the Philippines, Indonesia and Sri Lanka.
5. Of the 170,000 foreign domestic workers currently employed in Singapore, over half do not
enjoy a regular day off.
6. 50,000 new foreign workers are expected to join the Singapore job market in the next few
years as major construction projects get underway.
7. The Ministry of Manpower has outlined that a foreign worker on work permit in Singapore
earns a basic salary of not more than $1,800 (not including bonus) a month, but most of the
migrant workers are paid a lot less than this amount.
8. Workplace accidents, abuse, lack of proper housing and salary disputes are some common
problems faced by foreign workers in Singapore.
9. The recent global economic downturn has seen a rise in cases mistreatment or foreign
workers being left stranded without accommodation and salaries.
10. Presently, the Employment of Foreign Worker Act excludes domestic workers from
protections guaranteed to other workers, such as a standard number of working hours and rest
days, minimum wage and access to employment benefits.
* Statistics are compiled from various organisations and Internet news sources.
Why Foreign Workers Are Not To Be Entirely Blamed For The Issues We Face in Singapore [Part 1/2]Posted by theonlinecitizen on March 6, 2012
~ By: Eugene Lim ~
The issue of ‘foreign workers’ in Singapore has been a high-strung issue since the General Elections in 2011 as
it was highly sensationalized in the rally speeches of many local opposition parties. Foreign workers refer to a
large range of people including the lowly skilled, professionals and high-earning expatriates.
This issue affects the lives of almost every Singaporean and stands as a testament to a previously overlooked
agenda under the PAPgovernment. In the Singapore Budget 2012, it is evident that the PAP government has
acknowledged this issue and a number of substantial measures have been introduced to tackle it.
When delivering his speech on Budget 2012, Deputy Prime Minister Tharman Shanmugaratnam (who is also the
Minister of Manpower and Minister of Finance) commented that Singapore’s increasing dependence on foreign
workers is not sustainable and thus added measures to reduce inflows.
Over the last two years, Singapore’s foreign workforce grew by 7.5% and now stands at one-third of Singapore’s
total workforce. Often, foreign workers are blamed for the suppression of wages especially among the lower
income groups and increasing stress on housing and transport systems.
What is worrying about this strong emphasis on the issue of foreign workers is it might aggravate the xenophobia
among Singaporeans and lead some towards a dangerous belief that Singapore’s economy can be an autarky.
We are not alone in this world facing the same issues of influx of foreign workers. Many Western developed
economies are facing the same issue. The crux here is about how many and how fast. I wish to drive the point
across that we do need foreign workers, just not in excess (as in the present case).
There have been claims that the influx of foreign workers is the main cause of many existing issues that
Singaporeans face. In my opinion, some of these claims can be highly misleading and require a different
perspective. They include issues of low productivity growth, fiercer competition for jobs and higher cost of living.
The main purpose of this piece is to provide a balanced view that there are other underlying reasons for these
issues and foreign workers are not to be blamed entirely for them.
What the government hopes to achieve in 2012 is to flood SMEs with financial support and schemes to increase
productivity. Yet, in the case that I’ve pointed out above, such measures are of little help. The scenario illustrated
above is highly reflective of the conditions in many sectors in Singapore. This means that there are many SME
employers in Singapore that require more structural bridging schemes as opposed to monetary aid. The
government should put in place mechanisms that help these SMEs reduce search friction such as a central
agency that can match vacancies with skill sets of suitable local candidates. The government can also look into
the roots of the reasons why Singaporeans are not taking up these jobs and then rectify them accordingly. Simply
put, throwing money at a problem does not always solve it without appropriate diagnosis.
Since 2012 is predicted to be a year of slow growth, it will be easy to mask the adverse effects of poorly
performing SMEs as employment woes hit. However, in the long run, the government will not be able to gain
traction with a large number of affected SMEs if there is not enough provision of practical help to cope with the
transition. It is not just about curbing the influx of foreign workers, but also about what comes after.
Claim 3: The influx of foreign workers adds to the cost of living in Singapore and suppresses wages of
Singaporeans
Contrary to popular belief, foreign workers (especially low-skilled) workers actually help to create a downward
pressure for the cost of living in Singapore. Foreigners from developing countries like China or Bangladesh fill a
lot of low-skilled jobs such as those in construction, cleaning and serving in hawker centres. Singaporeans do not
want to take up these jobs due to social stigma. The only way to attract Singaporeans to do these jobs has to be
through higher wages which would then translate into higher costs for others. For example, if the noodle stall has
to hire a Singaporean and can only do so at a higher wage rate than before (from $4 an hour to $8 an hour), the
price of a bowl of wanton noodles is going to increase accordingly. Low-skilled foreign workers actually help to
mitigate our cost of living by doing jobs that Singaporeans does not want to.
On the other hand, it is the combination of an increasingly profit-driven and rent-seeking mindset of many
companies and weak labour/consumers rights that create the upward pressure for our cost of living. Singapore’s
labour unions used to be active and strong in the 1960s. The PAP’s rise to power was arguably largely attributed
to the labour movement then. Yet, in the face of industrialization post-independence, labour rights were subdued
in favour of a more docile workforce to attract multinational companies (MNCs). As a result of bare labour rights,
the trend of wage increase has not been able to keep up with the increase in the cost of living. In particular, this
trend severely affects the lower income group.
The cost of living is more than just inflation (this is on top of the omission of some important components i.e.
accommodation and private transport costs in the official core inflation figures) because it includes a wider basket
of items. In the absence of laws that effectively protect consumers, many Singaporeans (especially the low and
middle income group) are forced to suffer in silence when prices are raised indiscriminately. For example, public
transport fares have risen significantly in recent years despite a drastic drop in service standards. The public
transport system is privatized and the government often does not intervene substantially in their workings unless
absolutely necessary.
Current and future well-being of Singaporeans
There is no doubt that the influx of foreign workers due to the government’s lax policy has created some socio-
economic issues and tensions. However, it would be unfair and unjustifiable if we were to completely blame
foreign workers for all these issues. I would urge Singaporeans to also listen and incorporate some of the views
and concerns of foreign workers in Singapore. Isolating the foreigners and disallowing them to partake in the
decision-making process that affects them is synonymous to marginalizing up to 25% of our population. Having
foreign workers in our country is something we have to adapt to, not fight against. The concern we have is with
their numbers (that has a lot more to do with policies by our own government), not them.
The issues of productivity, competition for jobs and higher cost of living can be attributed to deeper structural
issues within our society and economy. The government can play a bigger role in resolving such tensions
through more precise and coordinated instructions within and among the ministries as well as better policy-
planning. Singapore is a small country that needs a certain amount of input of foreign workers for continuous
growth so we cannot afford to be xenophobic.
The solution here is to come up with a well-calibrated and well thought-out plan that will not jeopardize the most
important goal: the current and future well being of Singaporeans.
Risks of relying on foreign workers, says MP Heng
SINGAPORE: Senior Minister of State in the Prime Minister's Office, Heng Chee How, has warned of the risks of continuing to rely on foreign manpower to fuel economic growth.
He stressed that Singapore has to improve productivity and innovation while there's still time.
Citing a recent trip to Chongqing, Mr Heng said Chinese officials told him that the city's success at attracting investments and jobs from the coastal cities was based on cheap land, financing and manpower.
But the officials acknowledged that this "cheap sourcing" strategy was not sustainable in the long-term - it was a means to buy time to develop higher value production and services.
Mr Heng, who is the MP for Whampoa, said a Singapore core workforce must be built, andmove away from relying on foreign workers.
Mr Heng said: "What makes us think that the economic development that will occur in the home countries of our foreign labour sources would not naturally reduce the need and desire of their populations from wanting to leave home and work abroad?
"And if that happens, and if we are still bound to a model that critically depends on their free and abundant availability, would we not be exposing ourselves to unacceptable risks? And even if that does not happen, would we not at least be slowing our pace of innovation and transformation simply because of the painkiller than we can consume for the moment?"
Weighing in on the issue is Dr Chia Shi-Lu, MP for Tanjong Pagar GRC.
He welcomed the government's plan to reduce Singapore's "unhealthy reliance" on foreign workers.
Dr Chia said: "I often warn my patients who are otherwise healthy to avoid over-reliance on crutches and braces, and other walking assisting devices when they don't need them. The initial period after leaving these aids behind is difficult, but with the proper guidance, the patient recovers rapidly afterwards and grows from strength to strength.
"Contrast this with the patient who clings on to these crutches and this patient will slowly deteriorate over time to the point in which any form of mobility becomes excruciating. And so we must act decisively to rehabilitate ourselves from this dependence on foreign labour while our social, economic muscles are still healthy and able to."
On productivity gains, Dr Chia said he hoped the government will monitor the extent to which such gains are translated into real-wage growth.
He welcomed the beefed-up measures to help businesses achieve productivity growth.
But he noted the perception that gains are not equitably shared amongst employees when companies do well.
He added that businesses that have received government grants should be scrutinised to see how much of their employees' salaries have risen in relation to how well the company has performed.
The Special Employment Credit scheme will also be extended to employers who
hire special education (SPED) graduates, regardless of age. These employers will
also receive a credit of 16 per cent of their SPED graduate employee's wages.
The Workfare Income Supplement scheme will also be expanded to include all
SPED graduates who work, including those aged below 35, and all persons with
disabilities will also receive double their existing Handicapped Earned Income
Relief.
Tobacco Tax
DPM Tharman also said there will be a 20 per cent increase in tobacco tax.
Unmanufactured tobacco taxes will be up 10 per cent.
Tourism
Elsewhere, the government will inject $905 million into the Tourism Development
Fund to develop high quality tourism offerings.
Goods and Services Tax relief for goods brought in by tourists and residents
returning from abroad will be simplified and enhanced.
Budget Debate Round-Up Speech
SUPPORTING SME TRANSFORMATION OVER THE NEXT DECADE
Moderating Foreign Worker Growth
Pace of Tightening Measures
Flexibilities in Use of Foreign Worker s
Why Industry-Specific Foreign Worker Allocation will not Wor k
Calibrated Approach towards Employment Pass Holders
Our Basic Strategy for SMEs
SUPPORTING SME TRANSFORMATION OVER THE NEXT DECADE
4. Let me start with the challenge of transforming our SMEs. Many members such as Ms Jessica Tan, Mr Teo Siong Seng, Mr Inderjit Singh and others, have spoken with great concern about this topic.
5. We have to be concerned about our SMEs. Do they have a future? What role will they play in our economy? Will they be a vibrant part of it or will they suffer and find it difficult to survive, year after year?
6. The SME sector is a critical concern for our economic policies. They are also important from the social point of view because they are mainly owned by Singaporeans, and hire a majority of Singaporean workers. Therefore, keeping that part of our economy alive and thriving is also a way in which we preserve an inclusive society.
7. The operating environment for SMEs, as Mr Lim Swee Say said yesterday, is tough. We must never neglect our SMEs as we go forward.
8. The principal reason why the operating environment is tough is that costs are going up. The reasons are as Mr R. Dhinakaran mentioned a short while ago.
a. First, labour is more expensive, because wages have gone up significantly for Singaporeans. Basically,
the labour market is tight and will remain that way. This is however a good thing for Singaporean workers,
and we do not want this to change.
b. Second, rentals are increasing. This is principally because of our natural constraints as a city state, and
the fact our business community is on the whole doing well. Demand for office, industrial and commercial
space has gone up faster than supply because we have many more businesses being formed, and growing.
9. These are the two major cost drivers – a tight labour market with rising wages, and a strong demand for space (industrial, commercial, office) which is driving up rentals - which reflect our inherent structural constraints as a city-state. Rentals also follow a cycle, and hopefully this year rental growth will level off. We are already seeing signs of moderation in average rentals. MTI will be addressing the issue of rental costs more fully in its Committee of Supply.
10. But the fundamental constraints will remain. We are not a low-cost business location, and will not be in future. So we have to help our companies, and especially our smaller companies adapt to the reality of Singapore being a relatively high cost business location.
11. Where we can, we will try to mitigate or slow down the pace of cost increases. The Government has and will continue to make more land available under the Government Land Sales Programmes. We will ensure that there is sufficient commercial and industrial space to meet demand in the medium-term. If you look at the potential supply of new shop space, there are 90,000 sqm of new shop space coming on stream each year over the next five years. For industrial land too – extra land is coming on stream. In fact, 24ha of industrial land is being made available in the first half of this year.
12. These are the things we will do over the course of the property rental cycle, but the fundamental constraints remain unchanged. This is not a low-cost business location; it is a relatively high-cost business location and therefore needs relatively high productivity, relatively high skills, and the entrepreneurial abilities to put it together and not just survive, but thrive.
13. So this is what the government is focused on – helping our SMEs raise productivity and invest in better jobs, and that way also enable our people to have higher wages. It means training in skills, it means better use of technology, developing new products and better branding, and it means finding new markets abroad, including niche markets for specialised products or services. In each of these areas, the government pledges its support for our SMEs.
Moderating Foreign Worker Growth
Pace of Tightening Measures
14. Let me now address, more specifically, the concerns over foreign worker policy measures – how fast we should tighten, and if we should tighten at all. This occupied a good part of the debate on the challenges that SMEs are facing.
15. We just had another interesting term to describe our reliance on foreign workers - from Dr Lim Wee Kiak - ‘addictive narcotic drugs’. Earlier on we had ‘performance enhancement drugs’ from Mrs Lina Chiam, ‘crutches and braces’ by Dr Chia Shi-Lu, ‘intoxicants’ by Dr Amy Khor, and ‘two rear wheels of a bicycle’, Mr Patrick Tay.
16. Many descriptions, but let me first make clear that foreign workers are and will remain integral to our economy and to our competitiveness. They are a valuable complement to the Singaporean core that we must keep building up in every segment of our workforce. They are arms and legs, and part of the brain, of a competitive global city. Foreign employees are a valuable complement to our Singaporean core.
17. Our strategy of allowing foreign workers at all levels of our workforce - those with low skills and in areas where you do not normally find Singaporeans; those with technical skills; and those with the higher skills, the talented or entrepreneurial individuals who bring specialised skills, networks and opportunities for Singapore - this strategy has by and large worked. It has gone hand in hand with the rise in incomes of Singaporeans, both lower income Singaporeans as well as our middle income Singaporeans. You have seen the data.
18. As Dr Lim Wee Kiak just pointed out, and Mr Lim Swee Say emphasised yesterday, we are not “turning off the tap for foreign manpower”. There is no “cold-turkey treatment” for our companies. This is not a sudden change in policy. It is a graduated and calibrated strategy. We made our intentions very clear two years ago, after the Economic Strategies Committees report, when we started tightening. We introduced a 3 year programme of increasing foreign worker levies.
19. Last year we accentuated the increases, because foreign worker growth had been rapid in an unusually strong economic recovery. This year, we are taking a further step, with a calibrated reduction in dependency ratio ceilings, again because the growth of foreign workers continues to be rapid - and much more rapid than the growth of local workforce.
20. It will not be our last move. We have to watch how rapidly the foreign workforce grows this year. And if need be, we will have to make further moves particularly in the FW levies in the years to come. We will watch this carefully over this next year, and calibrate our moves so that businesses can adjust. We will also accompany any further levy increases with support for businesses to help them upgrade.
21. Members had differing views on the pace of FW tightening. Some members such as Mr Zainal Sapari, Mr Yeo Guat Kwang, Dr Chia Shi Lu, and a few others, were squarely in favour of the pace we have adopted in tightening policies. Some others were concerned and understandably, such as Mr Teo Siong Seng, Mr Inderjit Singh, Ms Lee Bee Wah. They were concerned about whether SMEs would be able to cope and whether we are moving a bit too fast.
22. Mr Low Thia Khiang and Mr Chen Show Mao, I think now recognise that we have to maintain a very careful balance in how we go about our foreign worker policy. I think you have shifted your position because I have checked what was said previously during the 2010 and 2011 Budget and COS debates and also your Workers’ Party Manifesto in last year’s General Election when you criticised the Government for allowing in too many foreign workers. I think your position now accords with ours, and recognises that this is a very careful balance. First, because we have to ensure that our companies can stay competitive, and that Singaporeans thereby keep their jobs and their incomes continue to grow.
23. Second, we have to be extremely concerned about the SMEs, which you have all rightly emphasised. If we withdraw the foreign workers too quickly, this will curb our SMEs and they will not be able to cope with the pace of change. But if we are too slow in tightening on foreign worker policies, the incentive to upgrade will also lessen. And we will face, as Mr Lim Swee Say said, even bigger and longer term problems further down the road. So it is a very careful balance we have to maintain.
24. The Government does not think we can slow the pace that we have adopted in our foreign worker policies - the pace of adjustment of the foreign worker levies, and the moderate reduction in dependency ratio ceilings. As I mentioned earlier, we may have to go further in future years on the levies. For the latest DRC measures, we are giving companies a 2-year transition period for them to adjust to the new DRC for existing workers, as we recognise that businesses have already invested and trained these workers.
25. For the larger companies, this is a challenge most can respond to. Investing in creating better jobs, equipment, looking for new markets, improving their branding. Many smaller companies will be affected, but in fact the number of workers involved in most of these cases is small. For most small companies affected by the new DRCs, they will only need to find a substitute for one or two foreign workers - either finding a Singaporean to take the job, or raising productivity.
Flexibilities in Use of Foreign Workers
26. There are some useful suggestions on some of the flexibilities we should consider in the use of foreign workers, so that businesses can optimise the use of their foreign workers within the dependency ratio ceiling limits.
27. Mr Ang Wei Neng and Ms Tin Pei Ling suggested allowing companies to keep experienced foreign workers who have been trained for longer periods, as long as the company is still within its DRC. There is merit to this proposal. Retaining well-trained and experienced foreign workers is a plus for productivity, and it spares the company from having to re-hire and re-train another foreign worker. MOM is reviewing its policy to see how we can achieve this objective for Work Permit Holders (WPH), particularly for workers who are unable to pass the stringent skills tests but have gained experience on the job and are useful people in the firm.
28. A second area of flexibility that has been raised is in the deployment of foreign workers across job duties within the same firm. We have been very strict about the occupational roles. In our dialogues with industry, business chambers and associations, there have been requests to allow more flexibility for this. For example, in hotels, housekeeping staff may be needed to help out in F&B when there is a slack period in housekeeping. And in small restaurants, they sometimes want kitchen staff who are not being used to be re-deployed as waiters, or vice-versa. In small restaurants, this can be a meaningful boost to efficiency.
29. MOM will look into allowing this. We will start with relaxing the occupational restrictions in the hotel sector. We will be working closely with our tripartite partners to set the criteria and conditions to make sure the productivity improvements also flow through into benefits for our local workers.
30. These are two useful suggestions we have received and we will look into them.
Why Industry-Specific Foreign Worker Allocation will not Work
31. Next, the broader issue of how our foreign worker policy is implemented. In particular, we have had some suggestions from Members as to whether we can give more flexibility to specific industries that seem to have greater need for foreign workers.
32. In reality, we already have different levies and DRCs for the broad five sectors of manufacturing, services, constructions, marine and the process industry.
33. Mr Low Thia Khiang and Mr Chen Show Mao have suggested that this framework is too blunt, and that we should instead work out foreign worker allocations at a greater level of disaggregation, to meet the industry-specific needs, and based on consultations with the industries. Mr Chen Show Mao specifically suggested that high-end industries like Aerospace should be given more stringent limits and industries like construction can be given more liberal limits. Some other MPs had suggestions for the cleaning industry, F&B, retail, healthcare and social services - all of which it was felt had special cases for why they should be treated differently and given more foreign workers.
34. Let me say that this approach has some appeal when you first look at it, and especially if you talk to the businesses, it is a very persuasive case because they are indeed short of workers.
35. But it will not in fact work.
a. First, it will not achieve our objective of preventing excessive growth in the overall number of foreign
workers.
b. Second, it will not achieve our objective of boosting productivity and incomes.
c. Third, it is not only impractical in practice, but it can be inequitable - it gives unfair advantage to some
firms over others.
36. Let me explain this in some detail, as this is an important issue on how we implement our foreign worker strategy. The reality of the matter is that the most rapid growth of foreign workers has been in the same sectors that we are now asked to make exceptions for.
a. These are the Construction industry and services industries like F&B and retail. Services and
Construction account for 90% of the total increase in foreign workers that we have seen in the last five years.
Within Services, it is basically the industries that the MPs have identified, that are the ones that have seen
the most rapid growth.
37. So if we want to be more liberal on them, whether it is in DRCs or levies, either we have to be extraordinarily stringent on the other sectors where foreign worker demand has not been going up, or we accept more rapid foreign worker growth overall. And the likely and realistic outcome is we will have more rapid foreign worker growth overall. That is the upshot.
38. Second if we are going to do something along the lines of what Mr Chen Show Mao suggested, where the more productive and higher skill industries are given more stringent limits, while the less productive ones like construction are given more liberal limits, over time, what that amounts to is that we provide more help to the low-productivity sectors relative to the high-productivity sectors. And that is the opposite of the restructuring we want to encourage in our economy, because that will hamper overall productivity growth. Overall, the economy weakens and slows down. What we instead want to do in every sector - whether it is construction or F&B - is to help every player to raise productivity. For companies that start off from a low base, never mind, raise productivity. For those that are already high in productivity, raise it even further. That is our approach.
39. The levy system is the basic approach we have in place to ration foreign labour. We don’t control the actual numbers that come in but we control the price. It is a level playing field, every firm in every industry knows what the levy is. Within the same industry, if I am competing with another firm and if I am less efficient, I will have to pay more, because I need more foreign workers. If I had to pay more, there is an incentive for me to upgrade. And for an industry is inefficient as a whole, the same incentives apply. So there are incentives for everyone to upgrade.
40. It would not be a sensible strategy to discourage upgrading, weaken productivity growth and seed further growth of our foreign workforce.
41. The same sectors that are in greatest need of foreign workers are also the sectors where our productivity lag furthest behind international leaders, such as Construction, F&B, Retail.
a. In F&B, we are three-quarters the level of productivity of Hong Kong and 40% the level of New York. In
retail, we are two-thirds the level of Hong Kong and 45% the level of New York in terms of productivity. In
Construction, we are one-third the level of Japan, and half the level of the US.
b. So, these very same industries which understandably cry out for more foreign workers are in fact those
with the greatest scope to upgrade productivity, and to attract Singaporeans into better quality jobs.
42. The third reason why it will not be the right approach to go ‘industry by industry’, or ‘firm by firm’, is because of its complexity, and because it would therefore also not make for an equitable system. There is a great overlap between industries. Even in the current system with broad sectoral distinctions between manufacturing and services, we already face issues of an unlevel playing field.
a. If I am a large F&B operator with a central kitchen, my central kitchen is classified as Manufacturing and
have an advantage over a smaller company that is not able to have a central kitchen and is hence classified
as Services, which is subject to a more stringent Dependency Ratio Ceiling.
b. Likewise, in a manufacturing company, in-house logistics is part of Manufacturing, whereas an
independent logistics provider is treated as Services, with more stringent foreign worker limits.
43. So, even with the broad classifications that we are making in our current framework, we already have problems at each of the boundaries, and consequently the lack of a level playing field. These inequities will be greatly accentuated if we get down to ‘industry-by-industry’ distinctions.
44. Take the aerospace industry, which Mr Chen Show Mao raised, as an example of an industry which should be given more stringent quotas. What is aerospace?
a. In reality, the aerospace industry comprises many different types of companies operating in a broad
cluster. It may sound high-end and high-skill, but actually a significant part of aerospace is airframe
maintenance and overhaul, which is highly labour-intensive. At the other end of the spectrum are skill-
intensive areas like the repair of components.
b. Within the aerospace industry, there are some large firms that perform both high-skill and low-skill,
labour-intensive businesses, and others that specialise in one particular segment.
45. It will be quite inequitable if a large firm that undertakes both the high end and low end segments is entitled to a higher foreign worker quota on grounds that it is doing low-end work, while a small firm that is competing with it at the high-end is forced to operate within the more stringent foreign worker quota.
46. These are the impracticalities and inequities that arise when we try to choose how many foreign workers each specific industry or firm should obtain based on merit or consultations. Who is more deserving than the other?
47. In fact, Mr Low Thia Khiang made a good point. We should avoid the situation where small firms are disadvantaged compared to large firms, or where a firm that is able to get foreign labour has an advantage and can succeed, while those that cannot are disadvantaged. That is precisely why we should not go about choosing and deciding that you should get more foreign labour and you should get less. It would be highly inequitable and will disadvantage our small firms in practice.
48. It is an interesting suggestion, but you may not have realised fully what its consequences will be. The consequences are quite predictable. It would mean more growth of our foreign workforce, lower productivity growth and a lot of inequity on the ground as well as scope for abuse.
Calibrated Approach towards Employment Pass Holders
49. We have to maintain a careful balance, and this applies also to the issue of Employment Pass holders. Mr Patrick Tay and Mr Low Thia Khiang raised concerns about Employment Pass holders. This is an issue we are concerned about as well.
a. First, let me say that Employment Pass holders are an important part of our economy. The growth in
Employment Pass holders in our workforce has gone hand-in-hand with the growth of local PME
employment, as well as local PME wages. The fact that both wages and employment went up for local PMEs
indicate that there has been an increase in demand for local PMEs.
b. Likewise, at the lower-end of skills - Singaporeans who perform ordinary jobs in our firms have also
benefited from the presence of Employment Pass holders. If you go down and look at any individual
company, you will see the complementarities. Without that team of people comprising both Singaporeans
and foreigners working in the technical and professional jobs, it would be hard for the company to stay
competitive and to generate the jobs lower down in the skills ladder.
50. So, we have to be careful about how we tilt this balance as we go forward. We are tightening on Employment Pass eligibility rules, because we want to build up our Singaporean core in each sector. But we are tightening in a graduated fashion.
51. Maintaining the right balance is crucial for our SMEs in particular, who are an important source of demand for Employment Pass holders and S Pass holders. Mr Low Thia Khiang spoke about the growth trends in both groups of pass holders in the previous two years. In fact, in the last two years, one-third of the increase in Employment Pass and S Pass holders were hired by small firms - those with less than 50 workers. If we tighten too quickly, these small firms will be the most hurt. So let us be careful about how we go about this.
52. I’m glad Mr Low now shares the same objective. We now have the same sense of needing to maintain a careful balance between lowering our dependency on foreign workers and helping our SMEs adapt.
Our Basic Strategy for SMEs
53. We will go about achieving this in a graduated fashion, and will not spare any efforts in helping our SMEs upgrade and improve productivity. I do not need to go through the schemes that have been announced in the Budget, but I do want to address Ms Jessica Tan’s point that some of our brochures about PIC are excessively long. I would like to assure her that no one will need to read 66 pages, which includes all the annexes. We will make it as simple as possible for SMEs. We will go out of our way to reach out to them, hold their hands, work with the business associations, enterprise development centres, and CDCs. We will proactively look for SMEs and help them to take advantage of our schemes, instead of waiting for them to come forward. We will talk more about this during the MOF’s Committee of Supply.
54. Mr Inderjit Singh asked if we will are overtaxing our SMEs, if we add up all the taxes that they pay. Now, our tax rates in Singapore are extremely low. Our tax rates for SMEs are lower than most jurisdictions. A small enterprise with a turnover of less than $10m pays on average corporate income tax of 8%. In Hong Kong, the same size company would pay about 16.5%, and in Taiwan about 17%. The other developed countries typically have higher tax rates.
55. There is then the foreign worker levy, which is a form of tax. But as I emphasised in the Budget, we are giving back much more to companies through our tax deduction and grant schemes, much more than the increase in foreign worker levies. And this applies especially to SMEs.
56. Not everyone will get the same support. We have adopted a strategy that that deliberately favours those that are doing something to train their workers, invest in equipment, and make better use of technology - anything to raise productivity. The gains are substantial, even for companies that do not have taxable profits - they can get a very generous cash co-payment. For every $100,000 of expenditure on productivity, the Government will pay $60,000.
57. But the company must do something, the company must invest in something, and then it gets aggressive support. That is our basic approach, and I think we have at least a fair chance of success. As Mr Lim Swee Say had emphasised yesterday, we cannot say for sure that we are going to succeed. But I think we have at least a fair chance of success, of ensuring that amongst our SMEs today and the new SMEs to come, that we will have a vibrant pool of Singapore firms 10 years from now, and with a significant international reach.
Key Budget Initiatives
MEASURES FOR BUSINESSES(A) Managing Our Dependence on Foreign Workers
(A1) Reduction in Dependency Ratio Ceilings (DRCs)
To manage our foreign worker inflow, DRCs will be reduced from 1 Jul 2012 as follows:
Manufacturing: from 65% to 60%.
Services : from 50% to 45%.
S Pass Sub-DRC: from 25% to 20% for all sectors.
Companies will have to comply with the new DRCs/Sub-DRCs for new foreign workers from 1 Jul 2012. For existing workers, companies will be given until 30 Jun 2014 to comply.
(A2) Reduction in Man-Year Entitlement (MYE) Quota
The MYE quota for new projects in the construction sector will be further reduced by 5% in Jul 2012. Foreign worker levies for basic skilled workers hired outside these MYE quotas will be raised.
More details can be found on the Ministry of Manpower website at www.mom.gov.sg.
(B) Measures for SMEs
(B1) Higher CPF Contribution Rates for Older Workers
The CPF contribution rates for workers aged above 50 years will be increased from 1 Sep 2012. The CPF contribution rates for those aged above 50 years to 55 years will eventually be raised to reach the full CPF contribution rate of 36%.
(B2) Enhanced Special Employment Credit (SEC)
The SEC is enhanced to encourage employers to engage older Singaporean workers aged above 50. It will more than offset the increase in employer CPF contribution rates for older workers.
The SEC scheme will be in place for the next five years (2012-2016). This will cost $470 million per annum. The Government will set aside $2.4 billion for the SEC payouts for the next five years. More details are available on the SEC website at www.sec.gov.sg.
(B3) SME Cash Grant
The Government will provide companies with a one-off cash grant, pegged at 5% of their revenues in YA2012, capped at a payout of $5,000. To qualify, the companies must have made CPF contributions to at least one employee. The scheme will cost around $320 million in FY2012.
(B4) Enhancements to Productivity and Innovation Credit (PIC) Scheme
The PIC scheme will be enhanced to benefit smaller companies:
Increase in cash payout from 30% to 60% for up to $100,000 of firms’ PIC expenditures per YA. This will
apply for YA2013 to YA2015.
Companies can claim cash payouts on a quarterly basis instead of at the end of the financial year. This
will apply from 1 Jul 2012.
Claims for in-house training costs of up to $10,000 a year will not require external certification. This will
apply from YA2012.
(B5) Enhanced Training Support for SMEs and Self-Employed Persons (SEPs)
Enhanced support for training for SMEs for three years, starting from Jul 2012:
Course subsidy: 90% for WDA-certified courses and Academic Continuing Education and Training
(CET) programmes at polytechnics and ITE.
Absentee payroll cap: Increased from $4.50 to $7.50 an hour.
Similar training benefits will be provided for self-employed persons. WDA will work with industry associates and agencies, such as the National Taxi Association and MDA, so that individuals such as taxi drivers and freelancers in the creative sector can benefit.
More details will be provided during the Ministry of Manpower and Ministry of Education Committee of Supply debates.
(B6) Grants to Support SME Upgrading and Productivity
Grants for capability development will be raised from 50% to 70% over the next three years under schemes managed by SPRING and IE Singapore. This will provide a $200 million boost over the next three years.
(B7) Renovation and Refurbishment Deduction Scheme
From YA2013, the amount of expenditure that may be claimed under the Renovation and Refurbishment Deduction Scheme will be raised from $150,000 to $300,000 for each three-year period.
(B8) Mergers and Acquisitions (M&A) Scheme
A 200% tax allowance (to be written down in 1 year) will be given on the transaction costs incurred in M&A, subject to an expenditure cap of $100,000. This will apply for M&A completed between 17 Feb 2012 and 31 Mar 2015.
(C) Capturing Opportunities for Growth
(C1) Helping Companies Internationalise
Project Financing
A project finance company (PFC) will be established by a consortium of financial institutions led by Temasek Holdings to plug gaps in financing for larger, long-tenure cross-border projects. The Government will guarantee the debt instruments issued by the PFC. At steady state, the PFC is expected to provide about $400 million of financing every year, in turn catalysing about $2-$3 billion of projects annually.
Trade Financing and Political Risk Insurance
The current suite of trade financing schemes under IE Singapore will be expanded to support Singapore companies in cross-border trade, including helping companies with the cost of political risk insurance.
More details will be provided during the Ministry of Trade and Industry Committee of Supply.
Double tax deduction may be given automatically, instead of on an approval basis, on qualifying expenses incurred on key overseas expansion activities. This will apply for up to $100,000 of expenses incurred for each YA, from 1 Apr 2012.
(C2) Tourism
The Government will inject an additional $905 million into the Tourism Development Fund to grow the tourism sector by attracting higher-spending tourists.
The GST Tourist Refund Scheme will be extended to international cruise passengers departing from the existing Singapore Cruise Centre and the upcoming International Cruise Terminal. The scheme will be implemented in Jan 2013.
(C3) Marine and Offshore
The Government will allocate $150 million from the National Research Fund to A*STAR and EDB to build our R&D capabilities to develop solutions for deepwater oil production.
(C4) Gold Trading Hub
The supply of investment-grade gold and other precious metals will be exempt from GST from 1 Oct 2012.
(C5) Providing Tax Certainty
To provide upfront tax certainty, clear guidelines will be provided specifying when a company will not be taxed on their gains from disposal of equity investments.
(C6) Excise Taxes on Non-Cigarette Tobacco Products
The excise duties on (a) beedies, “ang hoon” and smokeless tobacco; and (b) unmanufactured tobacco will be raised by 20% and 10% respectively with effect from 17 Feb 2012.
(D) Enhancing our Transport System
(D1) Carbon Emissions-based Vehicle Scheme (CEVS)
The current Green Vehicle Rebate (GVR) scheme will be replaced with a new CEVS in Jan 2013. This will cost the Government $34 million per year.
CEVS is based on carbon efficiency and will be applicable to all new passenger cars. Cars with low carbon emissions will enjoy rebates on their ARF of up to $20,000, while those with high carbon emissions will have to pay a registration surcharge of up to $20,000.
For commercial vehicles and motorcycles, the Government will extend the GVR scheme till end-2014.
More details will be provided during the Ministry of Transport Committee of Supply.
(D2) Lowering of Special Diesel Tax for Euro V Vehicles
The Special Tax for Euro V-compliant diesel cars will be lowered from $1.25 per cc to $0.40 per cc from 1 Jan 2013.
(D3) Removal of Additional Transfer Fee (ATF)
The ATF, levied on used-vehicle transactions, will be removed with effect from 18 Feb 2012. This amounts to $70 million per year in revenue forgone.
MOM announces measures to strengthen management of foreign workers in S'poreBy S Ramesh | Posted: 12 March 2010 1731 hrs
SINGAPORE : The Manpower Ministry (MOM) wrapped up the debate on its budget on Friday by announcing measures to strengthen the management of foreign workers in Singapore. It also stressed the need to enhance workplace safety and health across all sectors.
Foreign workers in Singapore constitute almost one-third of the total workforce and employment agents play a key role in managing them.
However, there has been a spike in the number of errant employment agencies over the last two years.
There are currently some 2,300 employment agencies as at the end of last year.
Last year, MOM received 1,280 complaints from employers, foreign workers and members of the public, regarding employment agency malpractices - an 80 per cent increase compared to the year before.
Lee Yi Shyan, Minister of State for Manpower, said: "By making it an offence for persons to knowingly engage an unlicensed employment agency, we intend to break the collusions involving kickbacks between employment agencies and errant employers."
On the cards is raising the standards and accountability of people who work for the employment agencies.
The ministry also wants to ensure adequate deterrence on some of the penalties imposed.
This will involve increasing penalties for some offences to impose costs that commensurate with the large potential gains from malpractices.
Mr Lee said: "The maximum penalty for operating an employment agency without a licence at S$5,000 pales in comparison to the fees that some foreign workers pay to come to Singapore. We can all look forward to many progressive changes to the employment agencies regulatory framework in this coming year.
" We hope to ensure better compliance and improve the standard of recruitment practices among employment agencies in Singapore. In doing so, Singapore will remain a choice destination for experienced and skilled foreign workers."
MOM also agrees with Members of Parliament who feel more can be done to facilitate better matching between employers and foreign domestic workers. At the last count, there were nearly 196,000 foreign domestic workers in Singapore.
This means that about one in every five homes in Singapore relies on a maid to help out at home.
Among the improvements proposed is a standard bio-data template for the industry, so that employers have enough information when choosing a maid.
Hawazi Daipi, Senior Parliamentary Secretary (Manpower), said: "MOM will be engaging the Foreign Domestic Worker Association for Skills Training to introduce a Settling-In Programme that includes lessons on Singapore's culture, norms, financial management and stress management."
The courses, to be held on weekends at some community centres, will start from May.
Mr Hawazi added that workplace safety and health for all workers will be another area of priority.
He said: "In the course of MOM's work, we have seen cases where stakeholders failed to engage their SME subcontractors to ensure that work was carried out safely.
"We would like to stress that whilst work can be outsourced, the duties of principals to ensure that work is done safely cannot be outsourced.
"Being the person who engages the contractor, the principal has the responsibility to hire the right subcontractor for the job, and ensure that it is able to carry out its work not only competently, but also safely.
"We will thus be amending the Workplace Safety and Health Act (WSHA) later this year, to ensure that principals remain accountable for the safety and health of the employees of their contractors and subcontractors, whether or not they direct the work."
The construction and marine sectors accounted for 63 per cent of the workplace fatalities last year. MOM said it will continue to address the challenges in these two risky sectors in 2010.
Besides addressing sector-specific risks, it will also work with industry to tackle riskier work activities conducted across several sectors.
Mr Hawazi said that last year, the industry took the helm and formed two task forces to improve the safety of work at height and crane operations.
The task forces identified gaps in safety management and made recommendations ranging from capability building, promotion and outreach, to regulatory issues.
MOM has been working closely with the industry to implement the recommendations.
From September next year, the WSHA will be extended to all workplaces.
This means that some 1.4 million workers from 16 industry sectors will be covered by the Act. - CNA/ms
