SINGAPORE – Foreign Worker Quotas Cut
The Singapore government has announced cuts to the foreign worker quotas (Dependency Ratio Ceilings, or DRCs) for work permits for companies in the services and manufacturing sectors, as well as for S Passes (mid skill level work authorisations) for all sectors. In the words of the Ministry of Manpower, the cuts are “to moderate foreign manpower demand and raise productivity” and are. “directly targeted at companies that continue to rely heavily on foreign manpower”. Employment Passes (work authorisations for managers, professionals and executives who earn at least SGD$3000/month) are unaffected.
What Are The Cuts?
The dependency ratio ceilings (DRC), or in other words, the foreign worker-local worker ratios, are reduced by 5% in the services sector, the manufacturing sector and for S-Passes across all sectors. This means that:
- The Services Sector Work Permit DRC will be reduced from 50% to 45% (although services companies with only one local employee will be allowed to continue to employ one work permit holder);
- The Manufacturing Sector Work Permit DRC will be reduced from 65% to 60%; and
- The S Pass Sub-DRC for all sectors will be reduced from 25% to 20%.
To illustrate, a company in the Services sector which hires 10 local workers can currently hire up to 10 foreign workers. With the reduced DRC, if the company’s local workforce remains at 10, it would have to reduce its foreign workforce by 2. Similarly, while a company in the Manufacturing sector with 5 local workers can hire up to 9 foreign workers currently, the reduced quota would mean that, if the local workforce remains at 5, the company would have to reduce its foreign workforce by 2 foreign workers.
When Will This Happen?
To give companies time to adjust their strategies, they will have up to 30 June 2014 to comply with the new DRCs in relation to their existing foreign workers. However, from 1 July 2012, companies which hire new foreign workers will not be allowed to exceed the new DRCs.
- Note the new ratios for work permits and S Passes and plan accordingly.