Employers to pay S$70 to S$400 more in foreign worker levy

SINGAPORE: Employers will have to pay between S$70 and S$400 more in foreign worker levy within the next two years.

The Ministry of Manpower (MOM) gave details on Tuesday of the increases, announced by Finance Minister Tharman Shanmugaratnam in his Budget Statement on Monday.

MOM said the levy rates will vary and will be based on the skills of the workers and how reliant the company is on foreign workers.

Homegrown bakery Pine Garden’s Cake is one of the companies affected by the new tightening measures on foreign workers.

Within the next two years, the company has to fork out as much as S$250 more a month in levies for every foreign worker it hires.

But the bakery says a much more bitter pill to swallow is the reduction in Dependency Ratio Ceiling (DRC).

Under the changes, it can hire fewer foreigners with the same number of local workers.

Wei Chan, business development director at Pine Garden’s Cake said: "The dependency ratio is the worst. When you talk about levies and so forth it’s essentially financial, we can work out the business, and we can try and do more and pay the levies, but without this quota, we are talking about the company being crippled and not even having its arms and legs to even function as a company and move the business forward."

The hike in levies will inevitably increase the company’s operating costs. Mr Wei said these higher costs will probably be passed on to consumers.

The increases for S Pass and work permit holders will occur twice — on 1 July 2014 and 1 July 2015.

For work permit holders, the increase is steepest for the construction sector at S$400 per worker.

This is based on the waiver of the Man—Year Entitlement (MYE), which is the quota of foreign construction workers that has been allocated to a contractor for a particular project.

In the process sector, the levy will go up by S$300; and that of manufacturing will be S$200 higher.

For the marine sector, the levy will cost S$170 more, while that of the services sector will increase by S$250.

As for S Pass holders in construction, manufacturing, process, marine and service sectors, the levy will go up by S$260.

To help companies in the services sector progress towards higher productivity, the job flexibility scheme will be expanded.

The scheme allows work permit holders to multi—task to raise productivity and help companies cope with labour constraints.

In October 2012, the scheme was launched in the hotel sector.

From July 2013, it will be extended to the entire services sector.

Mark Hall, vice president at Kelly Services said: "What you’re looking for in an individual is for the individual to maximise their productivity and maximise their potential. If someone is in a single job and can only stay in that job, you can’t maximise their potential."

The government is also giving companies more time to adjust.

Existing S Pass holders whose passes expire before July 2013 will get a one—time renewal.

Between July and December 2013, workers will receive a one—time renewal of up to one year.

Those who change employers after July 2013 will have their applications considered under the new S Pass criteria.

In a Facebook post on Tuesday, Acting Manpower Minister Tan Chuan—Jin said the latest round of foreign manpower policy enhancements is deliberate and the targeted cuts will be painful.

However, he said these enhancements are necessary to spur sectors that are heavily reliant on manpower to restructure, change the way business is conducted and increase productivity where they can.

— CNA/xq