top of page

How to reduce levy of foreign workers

Updated: Nov 28, 2021

SINCE the launch of the SkillsFuture campaign in 2015, much attention has been devoted to upgrading the workforce's "Singaporean core".

But employers and staff have been investing in foreign workers' capabilities as well, with bosses looking to better deploy manpower and employees hoping for better skills and wages.

Though local employees' skills are a policy priority, businesses stressed that it is not an either-or between both groups of workers. Observers also noted that employers may see foreign upskilling as necessary in sectors where locals are hard to come by.

Even before the virus crisis struck, construction company Lian Beng Group upskilled more than 250 foreign workers in the year to May 31, or one-fifth of its foreign workforce.

The company is now able to "cross-deploy workers in different functions and hence increase their value-add and overall productivity", as Lian Beng executive director Ong Lay Koon told The Business Times.

For instance, re-skilled staff have moved from housekeeping tasks, such as clearing work-site debris, to working as signallers and safety co-ordinators, or operating machinery such as boom lifts or automatic rebar bending and cutting machine.

But a major perk may be the ability to convert higher-skilled employees' work passes to less-restrictive types.

"As the levy for unskilled workers is higher than that for skilled workers, we also make it a point to equip our unskilled general workers with the skill sets," said Ms Ong, adding that this initiative raises workforce capability and lowers Lian Beng's overall foreign worker levy amount. She told BT, without giving numbers, that "several of them" have upgraded from work permits to S Passes.

With higher qualifications, S Pass holders could upgrade to EPs and release employer’s manpower quota for more essential roles.

To be sure, training of local workers is understood to be a policy priority for planners - taking precedence over upskilling the foreign workforce.

For instance, the Building and Construction Authority's Workforce Training and Upgrading Scheme, which used to support up to 80 per cent of eligible course fees for foreigners, stopped covering foreign personnel as at end-May this year.

In contrast, Singapore residents can access schemes such as the SkillsFuture Work-Study Programme, SkillsFuture Mid-Career Support Package and SGUnited Jobs and Skills Package.

So: "Why don't you spend all that amount to recruit a local?"

That is the question that Christopher Gee, senior research fellow at the National University of Singapore's Institute of Policy Studies, expects policymakers to ask when faced with applications for work pass upgrades.

That's as the cost of upskilling a foreign worker may include not just the training expenses but also higher wages and even a different levy rate.

Policymakers unveiled cuts to the maximum share of S Pass holders in the services, construction, marine and shipyard and process sectors, in the last two Budgets, in a bid to keep these jobs for locals. Deputy Prime Minister Heng Swee Keat said in February that S Pass growth is concerning since locals, such as polytechnic diploma holders, can fill such roles.

Mr Gee called such measures "designed to protect higher-skilled, therefore higher-wage, jobs for locals by creating these additional hurdles".

Irvin Seah, senior economist at DBS, also said that the investment in training "makes sense if the particular worker has the necessary skills and experience to fulfil the requirements of the position, and more so if this is a role that Singaporeans will shun - for example, a supervisor position in a construction site or a shipyard".

"While there could be some competition at the S Pass level between locals and foreigners, I personally feel that the competition is even higher at the EP segment," he noted, adding that the rivalry is also concentrated in services industries such as finance and information technology, rather than manufacturing and construction.

Ms Ong agreed that upskilling foreign workers "complements the training of our local team", saying: "As the skill sets of both groups are raised, we are able to reorganise our job functions and create opportunities for career progression across the board."

Source: The Business Times

237 views0 comments


bottom of page