(Refiles to fix literal in paragraph 5, remove extra word in para 8)
SINGAPORE, Feb 25 (Reuters) - Singapore unveiled a budget heavy on social spending on Monday and imposed new curbs on companies hiring foreign workers as the city-state tries to reduce its dependence on overseas labour and address a widening income gap.
Singapore, the Asian base for many Western multinationals and banks, has been trying to restructure its economy by getting restaurants and other services firms to boost productivity and curb their reliance on low-skilled foreign workers.
The city-state is also trying to narrow an income gap that is one of the largest among developed countries.
"We need to intensify this economic restructuring and skills upgrading so as to achieve quality growth. Although wages are going up in a tight labour market, productivity has lagged," Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said in his budget speech.
Tharman's budget for the fiscal year beginning April 1, 2013 included a rise in the levy that employers in Singapore must pay to hire low-cost foreign workers that will take effect in July 2014 and July 2015.
"The increases will be most significant in sectors where productivity growth is weak and the growth of the foreign workforce is significant," he said, citing the construction and marine sectors as among industries that will be affected.
He also said the ratio of low-cost foreign workers that companies can hire will be reduced to 40 percent of the workforce, down from 45 percent currently.
The government also will help companies cope with the tighter labour market by offering S$5.9 billion ($4.8 billion)in various schemes to help firms upgrade.
Tharman signalled the government will also become tougher on companies hiring professionals and managers from abroad.
"MOM (the Ministry of Manpower) will put in place a framework to ensure that firms give fair consideration to Singaporeans in their hiring practices," he said.
Jobs are plentiful in Singapore and the unemployment rate is below 2 percent, but salaries tend to be low relative to the cost of living, especially for menial workers such as cleaners who make around S$1,000 a month due to competition from foreigners.
The government's efforts to curb the number of foreign workers have raised the ire of employers, with the American and other chambers of commerce complaining of labour shortages and the Restaurant Association of Singapore saying eateries may be forced to shut down or move abroad.
Parliament recently approved a white paper that envisions the population of the small island nation growing by as much as 30 percent to 6.9 million by 2030. Foreigners will make up much of the rise, even if the pace of immigration is slowed.
The white paper sparked a rare public protest in the regimented state, just weeks after the long-ruling People's Action Party (PAP) lost a seat in parliament in a by-election. ($1 = 1.2376 Singapore dollars) (Reporting by Kevin Lim; Editing by Kim Coghill)
