Finance Minister Heng Swee Keat delivered his budget speech today and announced that the Government will significantly reduce the foreign worker quota and S Pass worker ratio for the services sector.
The Dependency Ratio Ceiling (DRC), which prescribes the maximum permitted ratio of foreign workers to the total workforce that an organisation is allowed to employ, presently stands at 40 per cent for the services sector.
The Government has promised to reduce the DRC for the services sector by five per cent in two years. The DRC will be reduced from 40 per cent to 38 per cent by January 2020 and then to 35 per cent by January 2021.
Further, the S Pass worker ratio in the services sector will also be slashed by five per cent in two years. The S Pass Sub-DRC in the services sector will drop from the current 15 per cent to 13 per cent by January 2020, before dropping to 10 per cent from January 2021.
The Finance Minister said that foreign manpower growth could be on “an unsustainable path” if current trends persists as he announced the impending changes to the foreign worker quota.
Earlier in his speech, he had said that the Government wants to invest in Singaporeans. As he covered the changes to the DRC in the services sector, Heng said: “Relying on more and more foreign workers is not the long-term solution.”
It is curious that the Government is only now making the decision to slash the foreign worker quota and S-Pass worker ratio for the services sector – a sector that many Singaporeans have the skills to be employed in.
It is also unclear whether these changes mean that excessive S-passes and work permits were given to foreigners who applied to work in the local services sector in the past.
The timing of the foreign worker quota changes is also notable, especially given speculation that the Government may call the next General Election as early as this year.
Heng, however, claimed that these changes are not divergent from the Government’s approach to foreign worker policies. He said, today:
“The basic approach to our foreign worker policies has remained consistent. Based on evidence on the pace of foreign worker inflows, and the progress being made in raising productivity across sectors, we need to calibrate our policies.
“The Government recognises the economic headwinds and cost pressures ahead of us. But if we do not take action early, our firms will find it harder to compete in the years ahead, and our workers will be left behind.”
The Finance Minister’s comment that the Government seeks to “calibrate” policies to protect local workers who may otherwise be left behind brings Prime Minister Lee Hsien Loong’s remarks made to People’s Action Party (PAP) cadres a year after the watershed 2011 election.
Public support for the PAP slipped during the 2011 General Election and the the ruling party lost a Group Representation Constituency (GRC) to the opposition. The PAP also received its lowest vote share since independence, in 2011.
Addressing PAP cadres at the ruling party’s biennial party conference, PM Lee spoke about the importance of re-evaluating its national priorities without going “overboard” or over-correcting. He said:
“We will calibrate to the left a bit, to the right a bit, but don’t flip-flop and turn (everything) upside down.”
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This article is part of The Independent’s Budget 2019 coverage. Please send your feedback and enquiries to news@theindependent.sg.