Employers pay $70 to $400 more in foreign worker levy by 2015

by Saifulbahri Ismail

Employers will have to pay between $70 and $400 more in foreign worker levy within the next two years.

The Ministry of Manpower (MOM) gave details of the increases today (26/02), a day after Finance Minister Tharman Shanmugaratnam announced further tightening to the foreign manpower policy in his Budget Statement.

The Ministry said the levy rates will vary and will be based on the skills of the workers and how reliant the company is on foreign workers.

Homegrown bakery Pine Garden's Cake is one of many companies affected by the new tightening measures on foreign workers.

Within the next two years, the company, (which is in the services sector) has to fork out as much as $250 more a month in levies for every foreign worker it hires.

But the bakery says a much more bitter pill to swallow is the reduction in Dependency Ratio Ceiling (DRC).

Under the changes, it can hire fewer foreigners with the same number of local workers, says the bakery's Business Development Director, Wei Chan.

"The dependency ratio is the worst. When you talk about levies and so forth it's essentially financial, we can work out the business, and we can try and do more and pay the levies, but without this quota, we are talking about the company being crippled and not even having its arms and legs even function as a company and move the business forward."

The construction sector is the hardest hit by the increase in levies.

The increase is significant because productivity improvements in this sector is weak, and the growth of the foreign workforce is large.

For a basic-skill foreign worker, the levy will jump by as much as $400, to hit $1050.

For semi-professional foreign workers under the S Pass category, the levy will increase by $260 (to reach $650).

The foreign worker policy enhancements also affect S Pass holders.

To help companies move towards higher productivity, the Manpower Ministry will be extending the Jobs Flexibility Scheme to the entire services sector.

The Ministry first introduced the scheme for the hotel sector last year.

Work permit holders will soon be able to multi-task and help companies cope with labour constraints.

The government is also giving companies more time to adjust to these changes.

Existing S Pass holders whose passes expire before July (2013) will get a one-time renewal.

Between July and December (2013), workers will receive a one-time renewal of up to one year.

Those who change employers after July (2013) will have their applications considered under the new S Pass criteria.)

In a Facebook posting today, Acting Manpower Minister Tan Chuan-Jin said the latest round of foreign manpower policy enhancements [Notes:amend here] is deliberate and the targeted cuts will be painful.

However, he said these enhancements are necessary to spur sectors that are heavily reliant on manpower to restructure, change the way business is conducted and increase productivity where they can.