Singapore will continue to reduce its dependence on foreign labour, announced Deputy Prime Minister and Minister for Finance Heng Swee Keat in his 2020 Budget Speech on Feb. 18.

Specifically, the government is moving to reduce the S Pass sub-dependency ratio ceiling (DRC) of the construction, marine shipyard, and process sectors from 20 per cent to 15 per cent.

It is the second year in a row measures like this have been announced, with last year’s Budget seeing a cut in DRC and S Pass sub-DRC thresholds for the service sector.

Levy rates for foreign workers will be maintained across all sectors for 2020.

S Pass holders grew 3.8% each year in past two years

According to Heng, S Pass holders in the construction, manufacturing, marine shipyard, and process sectors had been growing by 3.8 per cent each year, for the last two years, and can increase significantly over the coming years.

With the construction and marine shipyard sectors projected to recover, and more projects for the process sector coming in the future, the minister said he expected the number of S Pass holders to increase.

"However, the growth in S Pass holders must be sustainable," he said.

Cuts in two phases

The cuts announced will happen in two phases:

• The first cut will happen on Jan. 1, 2021, and will see S Pass sub-DRCs reduced from 20 per cent to 18 per cent
• Two years later on Jan. 1, 2023, S Pass sub-DRCs will be reduced to 15 per cent

“We are announcing the changes about a year ahead, to give time for enterprises to adapt,” said Heng.

He added that S Pass sub-DRCs for the manufacturing sector will not be reduced at this point in time, “given the economic uncertainties”.

“But we do want to manufacturing companies to make the effort to recruit local skilled workers and technicians too."

Acknowledging that potential concerns are likely to arise about the availabilities of skilled manpower in the construction, marine shipyard, and process sectors, Heng mentioned two avenues of recourse:

• SkillsFuture Singapore and Workforce Singapore will work with companies to find skilled local graduates starting their careers and older local professionals looking for new careers
• Enterprises that have specific needs can apply for additional manpower flexibilities in exceptional cases.

Top image by Jznl via Flickr