Enhancements to Foreign Manpower Policy for Quality Growth and Higher Wages

1. As announced by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam in the 2013 Budget Statement, the Ministry of Manpower (MOM) will tighten the eligibility requirements for S Pass holders in all sectors. Foreign worker levies (FWL) for S Pass Holders (SPHs) and Work Permit Holders (WPHs) will also continue to be increased up to 2015. Dependency Ratio Ceilings (DRCs) for the Marine and Services sectors will also be reduced. To further help Services sector companies progress towards higher productivity, the Job Flexibility Scheme will be introduced.
2. These measures, as well as others mentioned in the 2013 Budget Statement, are designed to spur the transformation of Singapore’s economy, towards inclusive and sustainable growth, and higher wages for Singaporeans. While foreign manpower growth in 2012 moderated slightly, further moderation is necessary to reinforce the impetus to restructuring and productivity efforts, and to slow down labour force growth to 1-2% per annum for the rest of this decade.
   
   Key Changes
3. The key changes to the foreign manpower framework are:
   
   a. S Pass:
   
   i. S Pass Qualifying Salary Criteria raised from $2,000 to $2,200 and higher (to be effective from 1 July 2013 for all new applications)
   
   • Older and more experienced S Pass applicants will need to qualify at higher salaries, commensurate with their work experience and the quality they bring. This is similar to changes made to the Employment Pass qualifying criteria which took effect from 1 January 2012. This will help ensure that the quality profile of S Pass applicants is raised concurrently as the demand for S Passes is moderated.
   
   ii. Transition Measures for Existing S Pass holders (SPHs)
   
   • Existing SPHs whose passes expire: 
      - Before 1 July 2013: receive a one-time renewal based on the pre-July 2013 S Pass criteria. 
   
      - Between 1 July 2013 and 31 December 2013: receive a one-time renewal of up to one year based on the pre-July 2013 S Pass criteria. 
   
      - On or after 1 January 2014: The new S Pass criteria shall apply.
   
   • Existing SPHs who change employers after 1 July 2013 will have their applications considered under the new S Pass criteria.
   
   b. Foreign Worker Levy (FWL) rates
   
   i. Progressive increase in levies for both S Pass and Work Permit Holders for all sectors; to take effect from 1 July 2014 and 1 July 2015 (please refer to Annex A);
   
   ii. Employers can expect the following average increases in the monthly levy per S Pass Holder/Work Permit holder by 1 July 2015, as compared to the current levy payable (at the end of the previously announced levy schedule which runs till 1 July 2013):
   
      • S Pass (all sectors) - $90 per S Pass holder
      • Manufacturing - $50 per Work Permit holder
      • Services - $90 per Work Permit holder
      • Construction- $160 per Work Permit holder
   
   c. Dependency Ratio Ceilings (DRC) reduced:
   
   Services sector (with effect from 1 July 2013 for all new applications):
   
   i. Services sector DRC to be lowered to 40%, from 45%;
   
   ii. S Pass sub-DRC for Services sector will be lowered to 15%, from 20%;
   
   iii. The above DRC reductions do not immediately affect existing workers. Please refer to the tables below:
   
   Table 1: Transition Timeline for Overall Services DRC Reduction
   
   

   	Before 1 July 2013	1 July 2013#	1 July 2014#	1 July 2015
   For new applications
   Company’s DR: 40-45%	✔	✔	✔	✔
   For renewal applications
   Company’s DR: 45%-50%^	✔	✔	✔ *	✔
   Company’s DR: 40-45%	✔	✔	✔	✔

   ^# While renewal applications may be renewed for up to two years, companies will still be required to comply with the new DRC by 1 July 2015.
   ^: This was the earlier transition arrangement MOM had provided for companies affected by the Services DRC reduction from 50% to 45% in 1 July 2012. MOM will continue to honour this transition arrangement.
   *: This marks the end of the transition arrangement from the earlier Services DRC reduction from 50% to 45%. From 1 July 2014, companies will not be allowed to retain any foreign workers above 45% DR utilisation.
   
   Table 2: Transition Timeline for Services S Pass Sub-DRC Reduction
   
   

   	Before 1 July 2013	1 July 2013#	1 July 2014#	1 July 2015
   For new applications
   Company’s Sub-DR: 15%-20%	✔	✔	✔	✔
   For renewal applications
   Company’s Sub-DR: 20%-25%^	✔	✔	✔*	✔
   Company’s Sub-DR: 15%-20%	✔	✔	✔	✔

   ^# While renewal applications may be renewed for up to two years, companies will still be required to comply with the new DRC by 1 July 2015.
   ^: This was the earlier transition arrangement MOM had provided for companies affected by the S Pass Sub-DRC reduction from 25% to 20% in 1 July 2012. MOM will continue to honour this transition arrangement.
   *: This marks the end of the transition arrangement from the earlier S Pass Sub-DRC reduction from 25% to 20%. From 1 July 2014, companies will not be allowed to retain any S Pass holders above 20% Sub-DR utilisation.
   
   Marine Sector (to be phased in from 2016-2018):
   
   i. Marine Sector DRC will be lowered from 1 local: 5 foreign workers (FWs) currently to 1: 4.5, with effect from 1 January 2016;
   
   ii. The DRC will be further lowered from 1: 4.5 to 1:3.5, with effect from 1 January 2018;
   
   iii. Companies are advised to make use of the lead time from now till 2016 -2018 to make the necessary adjustments to their business planning.
   
   Job Flexibility for Services Sector
4. On 1 October 2012, the Government introduced the Jobs Flexibility Scheme for Productivity for the Hotel sector. With effect from 1 July 2013, we will extend job flexibility to the entire Services sector. We will allow Services WPHs to multi-task to raise productivity, and help companies cope with labour constraints.
   
   i. MOM will consult the National Trades Union Congress and Singapore National Employers Federation to draw up a set of implementation guidelines, setting out expectations for employers implementing job flexibility, so that all employees are well-trained, and given fair opportunities to benefit.
   
   ii. Further details on the policy will be announced during MOM’s Committee of Supply debate 2013.
5. Please refer to Annexes B1 and B2 for an overview of the changes. Affected Services companies can go online to the MOM website (http://www.mom.gov.sg/foreign-manpower/foreign-worker-levies/Pages/calculation-of-foreign-worker-quotas.aspx), to calculate their new DRCs to see what the changes would mean specifically for them.
6. All employers are encouraged to use the Self Assessment Tool (SAT) available on the MOM website, before sending in S Pass applications, both for new hires as well as for renewals of existing SPHs. The SAT provides employers with a good indication of whether the candidate will qualify for an S Pass, hence giving businesses predictability on their application outcomes. The SAT can be found online at http://sat.mom.gov.sg/satservlet.