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IMPACT – HIGH
What is the change? Singapore will reduce the ratio of foreign workers in the construction, marine shipyard and process sectors in a two-step process beginning in 2021, according to the new budget.
What does the change mean? Beginning Jan. 1, 2021, companies in the construction, marine shipyard and process industries will only be permitted to employ S Pass holders as 18% of their total workforce, and the cap will drop again to 15% on Jan. 1, 2023. The current permissible percentage is 20% for these industries. For companies in the manufacturing industry, the ratio for S Passes will be reviewed at a later date because of economic uncertainty.
Background: The allowable percentage of foreign workers to Singaporean workers is referred to as the Dependency Ratio Ceiling (DRC), and S Passes are a sub category of the overall DRC. The government has observed an increase in the number of S Pass holders in the construction, manufacturing, marine shipyard and process sectors, and these numbers are expected to increase further over the next several years. Nevertheless, S Pass holder growth must be sustainable. The government is already working closely with enterprises to grow local manpower, including mid-career workers. The manufacturing industry will be reviewed in the future and may undergo similar sub-DRC reductions.
The following chart shows the changes to the DRC and sub-DRC in all sectors in the coming years.
Analysis & Comments: Following last year’s announcement during the budget on cutting dependency on the DRC and S Pass sub-DRC thresholds in the services sector, this announcement on tightening the foreign workforce quota in three additional sectors comes as no surprise. The reduction in the sub-DRC is aimed at encouraging employers in the construction, marine shipyard and process sectors to enhance their Singaporean workforce by hiring and training more Singaporean workers and transferring skills from their foreign employees to the local workforce.
Source: Deloitte. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. Deloitte Legal means the legal practices of Deloitte Touche Tohmatsu Limited member firms or their affiliates that provide legal services. For legal, regulatory and other reasons, not all member firms provide legal services. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms or their related entities (collectively, the “Deloitte network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte network shall be responsible for any loss whatsoever sustained by any person who relies on this communication. © 2020. For information, contact Deloitte Touche Tohmatsu Limited.
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