By Saifulbahri Ismail, S Ramesh | Posted: 21 February 2011 1654 hrs
SINGAPORE: Singapore's Ministry of Manpower (MOM) is sending a strong signal to businesses to invest in productivity changes and reduce their reliance on low-skilled foreign workers.
The ministry said changes in the foreign worker levies, which will be increased in phases from January 2012 to July 2013 at six monthly intervals, will have the greatest impact on the construction and services sectors.
It said the impact on the manufacturing, marine and process sectors will be more moderate.
There are nearly 1.1 million foreigners employed in Singapore as at end-2010.
Out of the 871,000 work permit holders employed in Singapore, 248,000 are in the construction industry.
Andrew Khng, president of the Singapore Contractors Association, said: "Like it or not, the construction industry has always been the biggest consumer of foreign workers. The reason is because there aren't any local construction workers, so we have to depend on the foreign workers...
"We try to maintain or contain the foreign workers dependence, but sometimes in a good construction growth like the last few years ... it is quite difficult not to rely on good construction workers."
Announcing details of the changes, which were first revealed by Finance Minister Tharman Shanmugaratnam in his Budget Statement last Friday, MOM said employers in the construction sector would need to fork out on average S$320 more per work permit holder between now and July 2013.
The current levy is in the region of S$160 to S$310. By July 2013, the levies for this sector will range from S$300 to S$600, depending on the number of skilled and unskilled workers.
The next big consumer of foreign workers is the services sector. Its present levy structure of S$170 to S$450 will go up to between S$300 and S$600.
Service sector employers can expect an average rise of S$260 per work permit holder.
In comparison, the levy increase for the manufacturing sector will be moderate. From the current S$170 to S$450 levy, it will rise to a range of S$250 to S$550 by July 2013.
Employers in the manufacturing sector can expect an average increase of S$130 in the levy for each work permit holder between now and July 2013.
Employers of S Pass holders can expect an average increase of S$240 in the monthly levy between now and 2013. The current levy of between S$110 to S$150 will go up to S$300 to S$450 in two years time.
In his budget speech in Parliament last week, Finance Minister Tharman emphasised that the increase in foreign worker levies was not merely a cyclical response to current conditions. He said it is a direction for the long term which the government is taking.
The government also wants to provide a clear and strong incentive for businesses to improve and upgrade their operations, train their workers and also rely less on low-skilled workers.
MOM said the changes are a strong signal to businesses to invest in productivity changes.
However, smaller companies in the construction industry will find this a big challenge.
Mohd Abdul Akbar, the managing director of Nan Guan Construction, said: "I think for the very small companies, the SMEs - especially the smaller ones, when you talk about productivity, it's something that's difficult to implement.
"When you talk about manufacturing, maybe it's possible through automation, improvements in processes and things like that."
Contractors said the impact of the levy hikes would be wide-ranging.
Mr Andrew Khng said: "We have been absorbing some of these cost increases throughout last year - the materials price have gone upwards.
"But this time, it is difficult even to absorb the levy increase because the levy increase is really substantial during this period. As a contractor, we are always sandwiched in between and sometimes costs need to be gradually spread through the whole value chain."
- CNA/cc/al
http://www.channelnewsasia.com/stories/singaporelocalnews/view/1112102/1/.html
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