Changes In Foreign Worker Levy Rates And Dependency Ratio Ceilings

singapore foreign worker budget levy quotaAs part of the 2013 budget, the government announced some changes to the Foreign Worker Levy Rates And Dependency Ratio Ceilings. According to the budget statement, these measures, as well as others  (e.g. tighter eligibility for S Pass holders), are designed to spur the transformation of Singapore’s economy, towards inclusive and sustainable growth, and higher wages for Singaporeans. While foreign manpower growth in 2012 moderated slightly, further moderation is necessary to reinforce the impetus to restructuring and productivity efforts, and to slow down labour force growth to 1-2% per annum for the rest of this decade.

Foreign worker levy is the levy that a company pays to the government for each S Pass or Work Permit holder it hires. It is a pricing mechanism to regulate the number of foreign workers in Singapore.

Progressive increase in levies for both S Pass and Work Permit Holders for all sectors; will take effect from 1 July 2014 and 1 July 2015. Employers can expect the following average increases in the monthly levy per S Pass Holder/Work Permit holder by 1 July 2015, as compared to the current levy payable (at the end of the previously announced levy schedule which runs till 1 July 2013):

• S Pass (all sectors) – $90 per S Pass holder
• Manufacturing – $50 per Work Permit holder
• Services – $90 per Work Permit holder
• Construction- $160 per Work Permit holder

Dependency Ratio Ceiling refers to the maximum permitted ratio of foreign workers to the total workforce that a company in the stipulated sector is allowed to hire. For example, the Dependency Ratio Ceiling in the Manufacturing sector is 60%. Hence, up to 60% of a Manufacturing company’s total workforce (sum of local workers, S Pass and Work Permit holders) may consist of S Pass and Work Permit holders.

In the Services Sector, with effect from 1 July 2013, for all new applications,  the Dependency Ratio Ceiling will be lowered to 40%, from 45%. The Marine Sector Dependency Ratio Ceiling will be lowered from 1 local: 5 foreign workers  (currently to 1: 4.5), with effect from 1 January 2016.

Written by: Amit Puri - Managing Consultant, Sandbox Advisors

Amit is an experienced career, business and HR professional. Previously, he has worked with organisations such as Bain & Company, Morgan Stanley and Citigroup. Amit has advanced degrees/qualifications in Career Counselling, Organisational Psychology & HR, Occupational Psychometrics, Career/Life Coaching & Business.

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