Raising the Quality and Productivity of the Foreign Workforce
Hire and retain better skilled workers a key priority
21 February 2014
- In the Budget Statement 2014, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam announced various measures to encourage employers to hire and retain better skilled foreign workers, as we pursue quality growth driven by better skills and higher productivity.
A. Longer Period of Employment for Construction, Marine and Process
- The current maximum Period of Employment (POE) for ‘Higher Skilled’ (R1) Work Permit Holders (WPHs) from Non-Traditional Sources1 (NTS) and the People’s Republic of China (PRC) in the Construction, Marine and Process sectors is 18 years. From 1 May 2014, the Ministry of Manpower (MOM) will extend the maximum POE for R1 WPHs in these sectors to 22 years2 to encourage firms to retain their trained and experienced WPHs for longer periods. Please refer to Annex A for an illustration of the change.
- This measure will allow companies in the Construction, Marine and Process sectors to retain 8,700 existing skilled workers for a longer period. These workers will reach the maximum POE of 18 years within the next five years; they would have had to be released without this extension.
- This extension of the maximum POE will not increase the number of WPHs in Singapore, as businesses are still required to keep within their Dependency Ratio Ceilings (DRCs)3. WPHs from Malaysia and North Asian Sources4 (NAS) will continue to be allowed to work up to age 60.
B. Market-Based Skills Recognition Framework (MBF) for Construction Sector
- Currently, WPHs in the Construction sector who are able to obtain the CoreTrade or Multi-skilling certification are classified as ‘Higher Skilled’ (R1). This requires WPHs to have at least four years’ experience in Singapore’s Construction sector and pass a skills test. Please refer to Annex B for an overview of the ‘Construction Skills Framework’.
- From 1 August 2014, ‘Basic Skilled’ (R2) Construction WPHs can also upgrade to R1 status if they:
a. have at least six years’ Construction experience in Singapore; and
b. earn a fixed monthly salary5 of $1,600 or more.
- The MBF for the Construction sector6 will provide an additional pathway for employers to upgrade their R2 WPHs to R1 status, so as to extend their maximum period of employment from 10 years to 22 years.
- An estimated 17,000 existing R2 Construction WPHs will be eligible for R1 status under the MBF this year. As more WPHs meet the salary and experience requirements over time, we anticipate this figure to grow. Employers who retain these Construction WPHs may also benefit from levy savings per WPH each month.
C. Higher Levy for R2 Construction WPHs
- From 1 July 2016, the foreign worker levy rate for R2 Construction WPHs on Man-Year Entitlements7 (MYEs) will be increased from $600 to $7008. The foreign worker levy rate for R1 WPHs will remain unchanged in 2016.
Taking Stock of Restructuring
- The above measures will benefit employers who upskill and retain better skilled and experienced WPHs over a longer time period. This will help moderate the demand for new, inexperienced WPHs, as part of the ongoing efforts to restructure Singapore’s economy to become more productive and manpower-lean.
- MOM will continue to monitor and assess the impact of previously announced foreign manpower tightening measures on the non-Construction sectors, before deciding if further adjustments are required.
NTS include Bangladesh, India, Republic of the Union of Myanmar, Philippines, Sri Lanka and Thailand.
The maximum POE for R1 PRC Manufacturing and Services WPHs will remain at 18 years. The maximum POE for ‘Basic Skilled’ (R2) NTS and PRC WPHs for all sectors remains unchanged at 10 years.
DRC refers to the maximum permitted ratio of foreign workers to the total workforce that a company in the stipulated sector is allowed to hire.
NAS includes Taiwan, Hong Kong, South Korea and Macau.
Please refer to the MOM Website, for the definition of ‘Fixed Monthly Salary
The MBF for Construction sector is similar to that introduced for the Services sector in July 2013.
MYE reflect the total number of man-years allocated to a main contractor for a specific construction project. One man-year allows the main contractor or its sub-contractor to recruit one WPH for one year. The number of man-years that is given to a specific project depends on the value of projects/contracts. Due to the varying nature of construction projects, the MYE-waiver provides flexibility to the specific manpower needs for respective projects.
Please refer to Annex C
for the ‘Overview of foreign worker levy for WPHs in the Construction sector till July 2016’.
Annex A - Revised Maximum Period of Employment For R1 WPHs In The Construction, Marine and Process Sectors
Annex B - Construction Skills Framework
Annex C - Overview of Foreign Worker Levy For WPHs in the Construction Sector till July 2016
FAQs For Market Based Skills Recognition Framework (MBF) For The Construction Sector