WORKER LEVIES UP FROM JULY

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SINGAPORE - With the overall dependency for all categories of foreign workers unchanged - employers can continue hiring the same number of foreign workers, but they will be paying more.

From July, foreign worker levies will be increased gradually over the next three years, starting with a "modest increase", said Finance Minister Tharman Shanmugaratnam yesterday.

Levy rates will first be raised by $10 to $30 for most Work Permit holders. Further increases will be phased in until it reaches a total increase of about $100 on average per worker in manufacturing and services.

However, there will be a "larger increase" in the construction sector, where there is "much scope for productivity improvements," said Mr Shanmugaratnam.

The current levy for Work Permit holders ranges from $150 to $470.

S Pass workers will see the biggest jump in their levy rates. From the single $50 rate now, there will be two levy tiers introduced, with rates at $100 and $120. By July 2012, the rates will reach $150 and $250.

These changes will "provide clear incentives for businesses to restructure and upgrade their operations so as to rely less on low-skilled foreign workers", said Mr Shanmugaratnam. However, he assured businesses they will get financial support to invest in productivity and develop higher-skilled workers, especially Singaporeans.

Explaining the need to manage Singapore's dependence on foreign workers, the Finance Minister said they already comprise one-third of the total workforce, and there are limits to the numbers Singapore can absorb.

Having the levies will allow employers to continue hiring foreign workers, rather than be "constrained by fixed quotas", he said.

Head of SIM University's Business Analytics programme Randolph Tan noted that the Government had taken "a paradigm shift" to distinguish between productive workers, and those who were not.

However Mr Tan noted that for an S-Pass holder earning $3,000 - and engaging in higher-skilled work - the higher $150 levy would be just 5 per cent, "way too low to influence employers to favour local workers", he said.

Some employers were surprised at the steep overall increase in levies, but vice- chairman for the Foochow Coffee Restaurant and Bar Merchants Association Hong Poh Hin felt it was better than tightening the quota as it gives businesses more "flexibility" in hiring decisions.

Lucky Joint Construction managing director Yeow Kian Seng said that without locals being interested in construction jobs, "we still have to "face the music" in order to keep projects going". But the company will move from labour-intensive projects to those involving cabling work that still attract locals.

Meanwhile, the Singapore Chinese Chamber of Commerce and Industry has urged the Government to "monitor its adverse impact" on local businesses - saying there is a need to be "more flexible and accommodating" in addressing manpower shortages in specific industries.

More details of the changes to the foreign levy will be released later this week.

From TODAY, Tuesday, 23-Feb-2010

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