Singapore to raise levy on foreign workers

SINGAPORE will increase the levies for companies hiring foreign workers as the country attempts to depend less on overseas labor, Finance Minister Tharman Shanmugaratnam said Monday.

Levies will be increased in stages over the next three years, Shanmugaratnam told Parliament in a budget speech.

The increase means Singaporean companies could be forced either to hire higher-skilled workers or increase automation—both of which will raise productivity.

The increase was one of the key recommendations of the Economic Strategies Committee, which said that while foreign workers would remain valuable to Singapore, especially those with skills, “we cannot increase the number of foreign workers as liberally as we did over the last decade, or else we will run up against real physical and social limits.

“Further, if access to labor is too easy, companies will have little incentive to invest in productivity improvements, which will affect our efforts to upgrade the skills and wages of lower-income Singaporean workers.”

Suggesting the best way to manage that dependence was to rely on the price mechanism, the committee said: “We need to raise the foreign worker levies progressively, giving companies time to adjust and to invest for productivity.

“This approach will allow flexibility for employment of foreign workers to fluctuate in response to the business cycle. The levy mechanism will enable competitive and dynamic business which run short of workers to seize opportunities and grow, without being hamstrung by rigid quotas.”

The committee, set up in May last year at the height of Singapore’s worst-ever recession to come up with strategies to help grow in the coming years, urged companies to change the way they work, and rely more on technology and innovation. –Manila Standard Today