Levy for mid-level skilled foreign workers to reach peak in July 2012

SINGAPORE: The levy for mid-level skilled foreign workers will reach its peak in July 2012. For companies reliant on such workers, it means potentially having to fork out up to five times more to hire them.

Makino Asia, a precision engineering company, has found a way to cut its reliance on foreign manpower and also raise its productivity.

Through customisation, process change and skills upgrading, the company has almost tripled its production capacity with the same number of workers. It is now producing 120 machines with about 400 workers instead of just 50 six years ago.

The company has among its workforce some 30 Work Permit and six S-Pass holders, who are mainly technicians from Malaysia. Such workers feature strongly within the services and manufacturing sectors because of the lack of locals who can fill the available jobs.

The S Pass was introduced in 2004 to help companies hire mid-level skilled manpower. These are foreign workers with qualifications and earning at least S$1,800 a month. S Pass holders are capped at 25 per cent of a company's workforce.

Over the past six years, this group has grown exponentially. Over the past three years alone, the numbers have doubled to reach 82,000 as of December last year.

From July, there will be a two-tier levy for S Pass holders - Basic Tier and Tier 2. It is hoped that this will moderate the growth of such workers.

If a company has more than 20 per cent of S Pass holders in its workforce, it would have to pay more to hire such workers. The ceiling for the basic tier will be lowered in July 2012.

Levy rates will be adjusted every 6 months until July 2012. By then, companies could pay up to S$250 for each S Pass holder (for Tier 2).

In summary:

Levy tiers from July 2010

Basic: 0-20% of workforce

Tier 2: 20-25% of workforce

Levy tiers from July 2012

Basic: 0-15% of workforce

Tier 2: 15-25% of workforce

Levy rates from July 2010

Basic: up from S$50 to S$100

Tier 2: introduced, at S$120

Levy rates from July 2012

Basic: Gradually increase to reach S$150

Tier 2: Gradually increase to reach S$250

The higher costs may affect the bottom line of some companies, but observers say it will also force employers to think out of the box.

Stephen Lee, president of Singapore National Employers Federation, said: "Yes, indeed this is a concern for companies with many S Pass holders. It is primarily the company's responsibility to look at ways to increase productivity. We cannot push this to the workers."

Dr Moh Chong Tau, CEO of Makino Asia, said: "If you say we increase (the levy)to S$250 today, then it will be a great impact. The three years allow them to adjust, improve themselves and therefore reduce the cost of manufacturing.

"I can tell you that foreign workers from China are not getting cheaper either as it goes along. Therefore, it will come to a day when we cannot depend on foreign workers."

Even in the healthcare sector, the response seems to be optimistic.

Human resource director at the Singapore General Hospital, Esther Tan, said: "A small percentage of our total nursing manpower is made up of foreign nurses, who are mostly S Pass holders.

"With the adjustments in levy for S Pass holders, there will invariably be some increase in manpower cost but this will not be significant".

By Imelda Saad, Channel NewsAsia Posted: 23 February 2010 2359 hrs

MOM releases details on foreign worker levy changes

SINGAPORE: The Ministry of Manpower (MOM) has released details on the planned increases in S Pass and Work Permit worker levy rates announced in the 2010 Budget on Monday.

The key changes are the introduction of new tiers and an adjustment of the rates every six months.

The construction sector will see the most changes.

Singapore currently has 1.05 million foreign workers. Of these, 856,000 are Work Permit holders - with 245,000 in the construction industry.

Between July this year and July 2012, the sector will see a 25 per cent reduction in man-year entitlements - meaning the number of foreign workers employed according to project value.

In addition, come 1 July 2011, the government will phase out the unskilled Work Permit holders category in the construction industry and reclassify the remaining ones as "basic skilled".

The ministry will also introduce a new tier for "higher skilled" workers who have relevant experience.

With these refinements, the levy for each "higher skilled" worker will be increased. Come 2012, it will be S$200 - up from S$160 in July this year. For those holding basic skills, it will be S$300 in 2012.

Andrew Khng, president of Singapore Contractors Association, said: "There will be an impact on business costs. But if it is progressively done, the impact will be marginal for the first few months. Then later, we will have to ... modify our work methods.

"We should be looking at more mechanisation and more innovative ways of construction, which I think now is a wake-up call for those contractors who have not been pursuing this because of too much work in the last few years.

"The association will help members to grow in tandem with our call to move towards mechanisation and also to upgrade the skills of the manpower or foreign workers in Singapore."

In manufacturing, the the basic tier will also increase from S$160 in July this year to S$200 in July 2012. For those in the second tier category, the levy will rise from S$180 this year to S$300 in 2012.

Stephen Lee, president of Singapore National Employers' Federation, said: "They worry that although it is only S$10 per step ... the sheer number they employ is very large, so this will add to the costs.

"Then some companies are a bit at a loss as to how they can increase productivity. So there is a job here for the tripartite partners to work together and work at industry level, especially for those which don't have in-house capability, to hold their hands to increase productivity."

The ministry said the levy changes will be gradual over the next three years to give businesses time to adjust, and there will be no changes to the levy for foreign domestic workers.

By S Ramesh, Channel NewsAsia Posted: 23 February 2010 1637 hrs

S$2.5b to be spent over 5 years on workers training

SINGAPORE: The drive for higher productivity will also mean raising the skills level of workers, especially older, low-wage workers.

And the government has earmarked S$2.5 billion over the next five years to expand the Continuing Education and Training system (CET).

It will also introduce a three-year Workfare Training Scheme as well as enhance the Workfare Income Supplement.

Finance Minister Tharman Shanmugaratnam said this when he presented the 2010 Budget Statement in Parliament on Monday.

40-year-old Woon Puay Guan has benefited from the Workfare scheme. He received about S$900 in payouts last year which helped him support his parents.

Mr Woon said: "My salary is very low. My mom doesn't work. (With the Workfare) I can give more money to my mother. My father stays in a nursing home, so I can use the money to pay for it."

Workfare, which started in 2007, acts as an incentive for low-wage workers like Mr Woon to stay employed.

From this year, the government is expanding the scheme, by an extra $100 million a year. In all, about 400,000 workers are expected to benefit.

Maximum payouts will go up by between S$150 and S$400, while the income ceiling will now be raised to S$1,700 - up from $1,500.

The government says this is to ensure Workfare benefits keep pace as workers upgrade their skills.

And efforts to develop a comprehensive skills upgrading system will take centrestage over the next few years. The government hopes to send the message that workers can continue to learn and add value to their jobs, whatever their age.

But for a start, incentives will be needed to get things moving. Under the new Workfare Training Scheme, subsidies for employers will cover 90 to 95 percent of course fees and manpower costs. Workers qualify for cash grants of up to $400 a year if they complete their training. The scheme is aimed at older workers, but younger recipients like Mr Woon may also apply.

Mr Woon said: "My education is very low, and my English is very poor. If can go and upgrade, it'll be better for me. Finding a job will also not be so difficult."

Mr Woon recently found a job as a cook, earning $1,200 a month - more than his previous salary as factory worker.

And with life looking up a little, he hopes to find the time for an English or computer class.

By Hoe Yeen Nie, Channel NewsAsia Posted: 22 February 2010 1655 hrs

HDB committed to build sufficient, affordable housing for citizens

SINGAPORE : The Housing and Development Board (HDB) is committed to providing sufficient and affordable flats to first-time Singaporean homebuyers, and it will make no distinction between indigenous and new citizens.

Senior of Minister of State for National Development, Grace Fu, said this in Parliament on Monday in reply to a question on how many new citizens rented homes, compared with those who bought properties.

Ms Fu said the government does not track the type of properties rented or owned by new citizens.

"As a policy, we do not distinguish between indigenous and new citizens. Our commitment in housing is to provide sufficient and affordable flats for first-time Singaporean homebuyers, whether new citizens or otherwise. I wish to reassure the House that HDB continues to uphold this commitment," she said.

By Evelyn Choo, Channel NewsAsia Posted: 22 February 2010 2049 hrs

Foreign worker levies to go up from July

SINGAPORE: Foreign worker levies are going up for both Work Permit and S-Pass holders. The increases will be phased in gradually over the next three years.

Finance Minister Tharman Shanmugaratnam, presenting the 2010 Budget Statement in Parliament on Monday, said the increases will be "calibrated and carefully phased in".

For a start, levy rates will go up between $10 to $30 for most Work Permit holders on July 1 this year. Adjustments will be made in 2011 and 2012.

In the next three years, companies can expect a gradual total increase of about $100 on average per worker in manufacturing and services.

The construction industry will see a larger increase, according to the minister.

Changes will also be made for S Pass workers, with two levy tiers instead of one. The rates for the first and second tiers will be $100 and $120 in July this year - going up from a single rate of $50 currently.

Further adjustments will be made till rates reach $150 and $250 by July 2012.

Mr Tharman spent some time explaining the thinking behind raising the foreign worker levies. He said that in the past, companies were able to get the workers they needed and expand during boom time. In fact this growth enabled household incomes to rise significantly from 2005 to 2008.

"This was therefore not a strategy of 'growth at all costs', but of growing our economy to raise Singaporean incomes," he said.

But with foreigners making up a third of the workforce, there is a limit to how many more Singapore can absorb. And if foreign workers are too readily available, employers will not have enough incentive to carry out the all-important goal of raising productivity.

Channel NewsAsia

By Hwee Goh/Joanne Chan, Channel NewsAsia Posted: 22 February 2010 1628 hrs

Channelnewsasia.com_Singapore localnews