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Foreign Worker Levy Changes

Foreign manpower

21 February 2011

Strong Signal to Businesses to Invest in Productivity
Changes to take effect from January 2012

  1. Last February, as the economy was just emerging from the recession, the Ministry of Manpower (MOM) announced that foreign worker levy (FWL) rates will be gradually raised starting from July 2010 to July 2012 as part of the Government’s strategy to achieve productivity-led growth. As our economy is now firmly back on track, the FWL rates will be further raised to support our national goals of encouraging productivity improvement, reducing reliance on low-skilled foreign workers, and fostering inclusive growth.
  2. This is a strategic shift and not merely a response to current economic conditions. It will send a strong signal to businesses to invest in productivity improvements, upgrade their operations, and reduce their reliance on low-cost, low-skilled foreign workers.
  3. The changes to the FWL rates and tiers for S Pass and Work Permit holders will be phased-in from January 2012 to July 2013, at 6-monthly intervals (see Annex A for details). The phase-in period will give businesses sufficient time to make the necessary adjustments.

    Key Features of the Changes
  4. The key features of the changes are:
    1. Changes to S Pass levy rates and tiers. Employers can expect an average increase in the monthly levy of $240 per S Pass holder between now and July 2013. Tier 1 will also be tightened from 20% to 10% by July 2013;
    2. Changes to Work Permit levy rates and tiers. While levy rates will rise across the board, the Construction and Services sectors will see the most significant changes while Manufacturing, Marine and Process sectors will experience more moderate ones.
      • Employers in the Construction sector can expect an average increase in the monthly levy of $320 per Work Permit holder between now and July 2013.1 A new skills framework will be implemented by the Ministry of National Development for the Construction sector in July 2011. To motivate Construction employers to train and upgrade their workers to attain a higher skills certification, the levy rate to be paid for higher skilled workers will be significantly less than for basic skilled workers. There will also be a further 15% cut in the Man-Year Entitlement quota for new projects in July 2013;
      • Employers in the Services sector can expect an average increase in the monthly levy of $260 per Work Permit holder between now and July 2013.2 The levy tiers will also be tightened.
      • Employers in the Manufacturing sector can expect an average increase in the monthly levy of $130 per Work Permit holder between now and July 2013.3 The levy tiers will also be tightened.
    3. No change in Dependency Ratio Ceilings, but companies with higher dependency on foreign manpower will pay a higher average levy per foreign worker. This enables companies that are expanding to continue to have access to foreign manpower to augment their local workforce. However, their levy bills will increase correspondingly.
  5. There will be no change to the Foreign Domestic Worker levy rates.
  6. MOM will continue to monitor and enforce against employers who attempt to recover the levies from their foreign workers directly or indirectly. Those who do so will be prosecuted and/or barred from hiring foreign workers.

1 For a Work Permit holder in the Construction sector, the average monthly levy is expected to rise by $200 due to the additional changes on top of the $130 due to the changes announced last year.

2 For a Work Permit holder in the Services sector, the average monthly levy is expected to rise by $180 due to the additional changes on top of the $100 due to the changes announced last year.

3 For a Work Permit holder in the Manufacturing sector, the average monthly levy is expected to rise by $60 due to the additional changes on top of the $100 due to the changes announced last year.

Glossary of Terms

Annex A - Schedule Of Foreign Worker Levy Changes Until July 2013

Factsheet On Tiered Levy Framework & Skills Qualification For Construction Sector