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MOM fine tunes foreign worker policy


Companies have more operational flexibility as MOM raises the dependency ceiling for manufacturing and services sectors. Skilled foreign worker levy partially restored in light of economic recovery.

With effect from 1 July 2005, the Ministry of Manpower (MOM) will make the following changes:
a) Raise the skilled foreign worker levy from $50 to $80.  There will be a further increase from $80 to $100 from 1 January 2006.

b) Increase the Manufacturing sector Dependency Ceiling from 50% to 60% and the Services sector Dependency Ceiling from 30% to 40%. Foreign workers hired above the existing Dependency Ceilings (that is, 50% for Manufacturing Sector and 30% for Services sector) will attract a new higher levy of $500 (skilled or unskilled).
Increase in Skilled Foreign Worker Levy for all Sectors
The skilled foreign worker levy was reduced substantially in 1998 and again in 1999 to help companies tide over the economic downturn. Since then, the levy has been increased by only $20 - from $30 to $50 in July 2004. With the recovery of the economy, it is timely to gradually restore the foreign worker levy.
MOM will progressively raise the skilled foreign worker levy, from $50 to $80 with effect from 1 July 2005, and to $100 with effect from 1 January 2006. The increase will apply to all skilled foreign workers across all sectors. The increase is staggered in 2 stages to allow companies time to make the necessary adjustments in response to the increase.
Increased Flexibility in Manufacturing and Services Sectors
Business cycles have become less predictable, and companies need greater flexibility to take advantage of new opportunities quickly. Some may need more foreign workers when Singaporeans cannot be immediately found to fill vacancies.
MOM will thus increase the Dependency Ceiling (DC) - the number of work permit holders a company can hire in its total workforce - to 60% and 40% for the manufacturing and services sectors respectively, with effect from 1 July 2005.
However, companies will have to pay a higher levy of $500 for every additional foreign worker (skilled or unskilled) that they hire above the existing DC of 50% for Manufacturing and 30% for Services. Companies which are below the existing DCs will not be affected. Please refer to Annex for details.
The changes to the DCs will provide companies with greater operational flexibility, and encourage them to expand their operations here. This will, in turn help create more jobs for Singaporeans over time when businesses grow.
The higher levy of $500 goes towards ensuring that companies make judicious use of foreign workers, and also narrows the wage gap between local and foreign workers.
More..... (Annex)

Source: Ministry of Manpower Press Release 10 Mar 2005


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17 March 2005