IMPACT – LOW

What is the change? The Singaporean government announced in its 2015 budget that it will defer proposed hikes in the monthly levies for Work Permits and S Passes until 2016 for all sectors and until 2017 for Work Permit holders in the manufacturing sector.

What does the change mean? Companies will not see increases in the levies in July as originally planned and can continue to pay the current levies for S Pass holders until next year.

  • Implementation timeframe: Immediate.
  • Visas/permits affected: S Passes and Work Permits.
  • Who is affected: Businesses employing foreign workers on S Passes and Work Permits.
  • Business impact: Businesses will have more time to plan for the anticipated levy increases and control labor costs.

Background: The delay in raising the levies is designed to give companies, especially small and medium-size enterprises, more time to adjust to the realities of tight labor market conditions.

According to finance minister Tharman Shanmugaratnam’s budget address on Feb. 23, the measures to control foreign workforce growth beginning in 2010 have successfully slowed the inflow of foreign workers from 60,000 in 2011 to just over 16,000 in 2014 (excluding construction and foreign domestic workers).

“The significant slowdown we have seen in the last year gives us space to adjust the pace of our tightening measures,” Tharman said. However, he added “unequivocally” that the government was merely adjusting the pace of tightening foreign worker measures – not changing direction.

“It remains crucial for Singapore that we restructure towards reducing our reliance on manpower, and find new and more innovative ways to do business,” he said.

BAL Analysis: Businesses are encouraged to consider retraining staff to improve skill levels and retaining staff that are more highly skilled and productive. The deferment gives businesses more time to accomplish these staff improvements.

This alert has been provided by the BAL Global Practice group and our regional office in Singapore. For additional information, please contact singapore@bal.com.

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