| 2.42 Third, we will fine-tune our foreign
worker policies. By allowing a controlled inflow of
foreign workers, we indirectly create more jobs for
Singaporeans. Foreign workers sustain many sectors of
our economy. Without them, many activities would not
be viable in Singapore – our factories would be
short of workers, we would have no wafer fabrication
plants, our financial services sector would not have
enough skilled professionals, and virtually every sector
would run short of IT personnel. In all these cases,
foreign workers help to create jobs for locals. But
we have to manage the numbers: too many foreign workers
and we depress wages of Singaporeans; too few and we
choke industry’s growth. We need to find the right
balance, and constantly review and refine our foreign
worker levies and rules.
2.43 We reduced the skilled foreign worker levy substantially
during the economic downturn, to help companies cut
costs and tide over the crisis. We raised this levy
back up modestly in July last year – from $30
to $50. It was a very small step. With the economy recovering,
it is timely to gradually restore the levy to a more
realistic level. MOM will therefore raise the skilled
foreign worker levy from $50 to $80 with effect from
1 July 2005, and further to $100 from 1 January 2006.
2.44 At the same time, we need to adjust the rules
for employing foreign workers. We presently operate
a complex combination of quotas and levies, coupled
with limited administrative discretion. Many companies
have told us that the rules are too rigid. For example,
they often cannot seize new business opportunities which
require more workers, because they cannot find Singaporean
workers and yet cannot employ more foreign workers because
they have reached the dependency ceiling. We need a
price-based mechanism which is more transparent and
efficient. Companies which urgently need more foreign
workers should be able to get them, by paying a higher
levy. And if the overall numbers grow too rapidly, we
should be able to tighten up on the supply simply by
raising the levy. Then foreign workers will go to companies
which can use them most productively and we will get
the best use from the foreign workers here.
2.45 We will therefore allow companies in both the
manufacturing and services sectors who urgently need
more foreign workers to employ more of them beyond the
present dependency ceiling, up to a higher limit but
at a higher levy, which we will initially set at $500.
Companies which are below the present dependency ceiling
will not be affected. This will give companies more
operational flexibility, and encourage them to expand
their operations here. MOM will announce the details
later.
2.46 These changes to the foreign worker levy and rules
should not increase the number of foreign workers here.
Their purpose is to increase flexibility for companies,
not to loosen the overall limits on foreign workers.
We will monitor closely the impact of the new rules
on foreign worker numbers, and make further adjustments
if necessary.
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