Budget 2021: Heng on foreign workers — 'We have to accept what this little island can accommodate'

He also announced that the S Pass quota for the manufacturing sector will be decreased next year.

Jane Zhang | February 16, 2021, 03:59 PM

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In his Budget speech in Parliament on Tuesday (Feb. 16), Deputy Prime Minister Heng Swee Keat spoke about the importance of enhancing the complementarity of local and foreign workforce, as well as stepping up industry transformation.

He announced extensions and updates to a number of existing measures meant to support local companies and workers.

We have to accept what we can accommodate: Heng

Heng acknowledged in his speech that some Singaporeans have been concerned about the country's reliance on foreign labour.

At the same time, he said, businesses and trade associations have said that they have found it difficult to hire locals, and ask that foreign worker quotas not be further tightened.

"The way forward is neither to have few or no foreign workers, nor to have a big inflow. We have to accept what this little island can accommodate."

Extension of Wage Credit Scheme and Capability Transfer Programme

Heng announced that he would be extending the Wage Credit Scheme (WCS) — which was announced in Budget 2013 and subsequently extended in Budget 2015 and Budget 2018 — for another year.

Under the WCS, the government helps employers co-fund a percentage of wage increases given to Singaporean employees.

Heng announced that the co-funding level for the one-year extension will be 15 per cent.

He also announced that the Capability Transfer Programme (CTP), which supports foreign-to-local skills transfer, will be extended until end-September 2024.

This is necessary, Heng says, because there are certain sectors where Singaporeans may be "short of skills", and thus the government "welcomes expatriates with the right expertise to complement Singaporeans, and help us build capabilities".

"This will allow us to add vibrancy to the local market, better serve international and regional markets, and enhance Singapore's attractiveness to global investors."

Heng noted that as of end-2020, more than 140 companies and over 970 locals either have already benefited or are expected to benefit from 40 projects.

S Pass ratio

Finally, Heng announced, the Sub-Dependency Ratio Ceiling (sub-DRC) — or the proportion of S Pass holders that a company can employ — for the manufacturing industry will be reduced in two steps, once in 2022 and once in 2023.

In Budget 2020, Heng had said that S Pass sub-DRCs for the manufacturing sector were not to be reduced at that point in time "given the economic uncertainties", but added that they would be tightened when conditions allowed.

The sub-DRC for manufacturing will be decreased to 18 per cent starting from Jan. 1, 2022, which gives companies one year to adjust to the change.

It will then be cut to 15 per cent, from Jan. 1, 2023.

Heng said:

"To achieve our vision of being a global advanced manufacturing hub, firms must make it a priority to develop a strong, highly-skilled local core in their workforce.

We cannot do without foreign workers — especially those with deep skills — but we should moderate further our reliance on them, so as to focus on creating good jobs on locals."

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Top photos via Facebook / Ministry of Finance and Roslan Rahman/AFP via Getty Images.