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More benefits for local workforce from enterprise initiatives; services to undergo foreign worker quota cuts

Michelle Zhu

SINGAPORE (Feb 18): Starting from April 1 2020, Singapore will require all transformation efforts supported by Enterprise Singapore’s Enterprise Development Grant to include positive outcomes for workers, such as wage increases.  

To help firms adjust to this change, the 70% funding support level for the Enterprise Development Grant, which is due to lapse after March 2020, will be extended for three more years until end-March 2023.

Similarly, the scope of Singapore's Productivity Solutions Grant will be expanded to support up to 70% of the out-of-pocket costs for training.

The announcement, delivered by Finance Minister Heng Swee Keat as part of the Singapore Budget 2019, comes as part of the government’s efforts to ensure that the benefits of enterprise transformation are passed on to local workers.

Separately, Heng highlights the issue of discrepancies in the productivity growth across sectors – unlike the manufacturing sector, which has done well in the face of global competition, some segments like F&B and Retail in the Services sector remains very labour intensive.

“We need to act decisively to manage the manpower growth in Services, and encourage our companies to revamp work processes, redesign jobs and reskill our workers. Our workforce growth is tapering… What we need is to have a sustainable inflow of foreign workers to complement our workforce while we upgrade our Singaporean workers and build deep enterprise capabilities in these sectors,” Heng states.

As such, the government is adjusting the workforce quota for the services sector.

Specifically, the services sector Dependency Ratio Ceiling (DRC) will be reduced over two phases: from 40% to 38% on Jan 1 2020 and subsequently to 35% on Jan 1 2021. Firms whose existing workers are in excess of the new limits will have to adhere to the adjusted DRC as and when they apply for renewal of permits.

The services sector S-Pass Sub-DRC will also be reduced from 15% to 13% with effect from Jan 1 2020, and to 10% on Jan 1 2021.

These changes have been announced a year ahead to give companies time to prepare for them, says Heng.

In certain cases, however, firms may continue to apply for additional manpower flexibilities such as via the Lean Enterprise Development Scheme, which provides support to firms undergoing transformation projects with the aim of achieving a more manpower-lean business.

Firms may also bring in foreign workers with specialised skills that are in demand globally – albeit on a case-by-case basis, provided that these firms still face a shortage after having given fair consideration to Singaporeans.